1. Due Date for Payment of Service Tax for assessees other than individual, Proprietory Firm and Partnership Firm (electronic payment through internet banking manadatory w.e.f.01-10-2014)

Title: 1. Due Date for Payment of Service Tax for assessees other than individual, Proprietory Firm and Partnership Firm (electronic payment through internet banking manadatory w.e.f.01-10-2014) Date: 2015-06-06

A Rajya Sabha committee examining the constitution amendment Bill for a goods and services tax (GST) on Friday asked Revenue Secretary Shaktikanta Das to inform the members by early next month on how the one per cent tax above GST, to help the manufacturing states, will be imposed.

The committee also asked the revenue secretary for greater clarity on the compensation to manufacturing states and the fate of consuming states.

An additional one per cent tax is proposed in the Bill to help manufacturing states. Since GST is a destination-based tax system, manufacturing states such as Gujarat and Tamil Nadu have reservations over it. However, this tax to help GST might have a cascading effect since there is no provision of input credit. Recently, Chief Economic Advisor Arvind Subramanian criticised the provision, suggesting the government reconsider it.

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At the second meeting of the committee on Friday, the urban development ministry and the panchayati raj ministry made presentations to the committee on the benefits of imposition of a GST regime. The urban development ministry, for instance, emphasized that GST would help boost the coffers of towns and municipalities.

A representative from the Brihanmumbai Municipal Corporation also made a presentation before the committee. The civic body earns as much as Rs 15,000 crore through octroi and local body tax; this would be subsumed once GST is imposed. The revenue secretary made it clear that it was the domain of the states to address this issue.

Incidentally, this being a constitutional amendment Bill, after it is cleared by Parliament it will need to be ratified by at least 50 per cent of all state assemblies.

Meanwhile, to ensure that the views of states, the actual “stakeholders”, are taken into account, the committee will be travelling to Chennai, Kolkata and Mumbai in June.

At the two-hour long meeting on Friday, the finance ministry assured the committee that the federal structure of states will be respected and there won’t be any encroachment on state jurisdiction.

States like Tamil Nadu, a manufacturing state, have opposed the imposition of GST as it would impact the revenues of the state and it affects states’ fiscal autonomy. Tamil Nadu, for instance, wants its concerns to be resolved by the empowered committee of state finance ministers before the Bill is passed.

Source : PTI

Govt confirms fiscal deficit for 2014-15 was 4% of GDP : 30-05-2015

The central government, it was officially confirmed on Friday, managed to rein in its fiscal deficit for 2014-15 at four per cent of Gross Domestic Product (GDP), against the 4.1 per cent pegged in the Budget Estimate (BE) and its Revised Estimate (RE).

Tentative indications in this regard had been issued recently but were awaiting confirmation.

However, in the first month, April, of the new financial year, 2015-16, the deficit was Rs 1.27 lakh crore or 23 per cent of the full-year BE of Rs 5.56 lakh crore, due to front-loading of spending. This was higher than the 21.4 per cent of the BE in April 2014.

In absolute terms, the fiscal deficit was checked at Rs 501,880 crore in 2014-15 against the RE of Rs 512,628 crore and the BE of Rs 531,177 crore.

The deficit is estimated at 3.9 per cent of GDP for 2015-16.

April 2015 had no tax receipts; rather, refunds amounted to Rs 2,813 crore. Non-tax revenue was Rs 28,126 crore or 12.7 per cent of the full-year target of Rs 2.22 lakh crore. Total receipts for the month were Rs 27,094 crore or 2.2 per cent of the full-year BE of Rs 12.22 lakh crore, compared with 0.6 per cent for April 2014.

Non-plan expenditure for the month was Rs 1.19 lakh crore or 9.1 per cent of the full-year target of Rs 13.12 lakh crore. For April 2014, it was eight per cent of the full-year target. Plan spending for April 2015 was Rs 35,160 crore, about 7.6 per cent of the BE of Rs 4.65 lakh crore, compared with four per cent for the year-ago period.

As a norm, successive governments front-load spending for the financial year, while most revenues come during the second half.

G.S. R. - In exercise of the powers conferred by section 399 read with sub-sections (1) and (2) of section 469 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules further to amend the Companies (Registration Offices and Fees) Rules, 2014, namely:-

1. (1) These rules may be called the Companies (Registration Offices and Fees) Second Amendment Rules, 2015.

(2) They shall come into force from the date of their publication in the Official Gazette.

2. In the Companies (Registration Offices and Fees) Rules, 2014, in rule 15, the following proviso shall be inserted:

“Provided that no person shall be entitled under section 399 to inspect or obtain copies of resolutions referred to in clause (g) of sub-section (3) of section 117 of the Act.”.

[File No. 1/16/2013-CL-V]

(Amardeep Singh Bhatia)

Joint Secretary to the Government of India

Note: - The principal rules were published in the Gazette of India, Extraordinary, Part-II, Section 3, Sub-section (i), vide number. G.S.R. 268(E), dated the 31st March, 2014 and was last amended by notification vide number G.S.R 122(E), dated the 24th February, 2015.

G.S.R. _ (E). - In exercise of the powers conferred by section 7 read with sub-sections (1) and (2) of section 469 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules further to amend the Companies (Incorporation) Rules, 2014, namely:-

1. (1) These rules may be called the Companies (Incorporation) Second Amendment Rules, 2015.

(2) They shall come into force from the date of their publication in the Official Gazette.

2. In the Companies (Incorporation) Rules, 2014,-

(a) in rule 12, the following proviso shall be inserted, namely:-

“Provided that in case pursuing of any of the objects of a company requires registration or approval from sectoral regulators such as Reserve Bank of India, Securities and Exchange Board, registration or approval, as the case may be, from such regulator shall be obtained by the company before pursuing such objects and a declaration in this behalf shall be submitted at the stage of incorporation of the company.”;

G.S.R. (E). - In exercise of the powers conferred by sections 77, 78 and 79 read with sub-sections (1) and (2) of section 469 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules further to amend the Companies (Registration of Charges) Rules, 2014, namely:-

1. (1) These rules may be called the Companies (Registration of Charges) Amendment Rules, 2015.

(2) They shall come into force from the date of their publication in the Official Gazette.

2. In the Companies (Registration of Charges) Rules, 2014, in rule 3, in sub-rule (4), in clause (a),for the words “under the seal of the company”, the words “under the seal, if any, of the company” shall be substituted;

S.O. _ (E).- In exercise of the powers conferred by sub-section (2) of section 1 of the Companies (Amendment) Act, 2015 (21 of 2015), the Central Government hereby appoints the 29th May, 2015 as the date on which the provisions of sections 1 to 12 and 15 to 23 of the said Act shall come into force.

G.S.R. (E). - In exercise of the powers conferred by sub-sections (1) and (2) of section 469 of theCompanies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules further to amend the Companies (Share Capital and Debentures) Rules, 2014, namely:-

1. (1) These rules may be called the Companies (Share Capital and Debentures) Second Amendment Rules, 2015.

(2) They shall come into force from the date of their publication in the Official Gazette.

2. In the Companies (Share Capital and Debentures) Rules, 2014, in rule 5, in sub-rule (3),-

(i) for the words “issued under the seal of the company”, the words “issued under the seal, if any, of the company” shall be substituted;

(ii) for clause (b), the following clause (b) shall be substituted, namely:-

“(b) the secretary or any person authorised by the Board for the purpose:

Provided that in case a company does not have a common seal, the share certificate shall be signed by two directors or by a director and the Company Secretary, wherever the company has appointed a Company Secretary:

Provided further that, if the composition of the Board permits of it, at least one of the aforesaid two directors shall be a person other than a managing director or a whole-time director:

Provided also that, in case of a One Person Company, every share certificate shall be issued under the seal, if any, of the company, which shall be affixed in the presence of and signed by one director or a person authorised by the Board of Directors of the company for the purpose and the Company Secretary, or any other person authorised by the Board for the purpose, and in case the One Person Company does not have a common seal, the share certificate shall be signed by the persons in the presence of whom the seal is required to be affixed in this proviso.”.

[File No. 1/4/2013 CL-V]

(Amardeep Singh Bhatia)

Joint Secretary to the Government of India

Note: - The principal rules were published in the Gazette of India, Extraordinary, Part-II, Section 3, sub section (i), vide number G.S.R. 265(E), dated the 31st March, 2014 and was last amended bynotification vide number G.S.R 210 (E), dated the 18th March, 2015.

G.S.R. (E). - In exercise of the powers conferred under sub-section (1) of section 123 read withsection 469 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules further to amend the Companies (Declaration and Payment of Dividend) Rules, 2014, namely:-

1. (1) These rules may be called the Companies (Declaration and Payment of Dividend) Second Amendment Rules, 2015.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. In the Companies (Declaration and Payment of Dividend) Rules, 2014, in rule 3, sub-rule (5)shall be omitted.

[F. No. 1/31/2013-CL-V-Part]

AMARDEEP SINGH BHATIA

Joint Secretary to the Government of India

Note. - The principal rules were published in the Gazette of India, Extraordinary, Part-II, Section 3, Sub-section (i), vide number G.S.R. 241(E), dated the 31st March, 2014 and was subsequently amended by notification number G.S.R. 397(E), dated the 12th June, 2014 and number G.S.R. 121 (E), dated the 24th February, 2015.

G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendment in the notification of the Government of India, in the Ministry of Finance (Department of Revenue), No. 12/2012-Central Excise, dated the 17th March, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 163(E), dated the 17th March, 2012, namely:-

In the Annexure to the said notification, in List 11, in item No. 48, for the letters “STPP”, the letters “TPP” shall be substituted.

Deferred Payment Protocols dated April 30, 1981 and December 23, 1985 between Government of India and erstwhile USSR

Attention of Authorised Dealer Category-I (AD Category-I) banks is invited to A.P. (DIR Series) Circular No. 99 dated May 14, 2015 wherein the Rupee value of the Special Currency Basket was indicated as ₹ 88.3042 effective from April 30, 2015.

2. AD Category-I banks are advised that a further revision has taken place on May 05, 2015 and accordingly, the Rupee value of the Special Currency Basket has been fixed at ₹ 77.6331180 with effect from May 06, 2015.

3. AD Category-I banks may bring the contents of this Circular to the notice of their constituents concerned.

4. The Directions contained in this circular have been issued under sections 10(4) and 11(1) of theForeign Exchange Management Act (FEMA), 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully,

(A.K. Pandey)

Chief General Manager

No. 104 Dated: 28-5-2015

Exim Bank’s GoI supported Line of Credit of USD 100 million to the Government of Republic of Mali – Circular – Dated 28-5-2015 – FEMA

RBI//2014-15/615

A.P. (DIR Series) Circular No.104

May 28, 2015

To

All Category – I Authorised Dealer Banks

Madam / Sir,

Exim Bank’s GoI supported Line of Credit of USD 100 million to the Government of Republic of Mali

Export-Import Bank of India (Exim Bank) has entered into an Agreement dated January 11, 2012 with the Government of Republic of Mali, for making available to the latter, a Line of Credit (LOC) of USD 100 million (USD One Hundred million) for financing a power transmission project connecting Bamako and Sikasso via Bougouni in Mali. The goods, machinery, equipment and services including consultancy services from India for export under this Agreement are those which are eligible for export under the Foreign Trade Policy of the Government of India and whose purchase may be agreed to be financed by the Exim Bank under this Agreement. Out of the total credit by Exim Bank under this Agreement, the goods and services including consultancy services of the value of at least 75% of the contract price shall be supplied by the seller from India and the remaining 25% goods and services (other than consultancy services) may be procured by the seller for the purpose of the eligible contract from outside India.

2. The Credit Agreement under the LOC is effective from April 17, 2015 and the date of execution of Agreement is January 11, 2012. Under the LOC, the last date for opening of letters of credit and disbursement will be 48 months from the scheduled completion date of contract in the case of project exports and January 10, 2018 (72 months from the execution date of the Credit Agreement) in the case of other supply contracts.

3. Shipments under the LOC will have to be declared on EDF/ SDF Forms as per instructions issued by the Reserve Bank from time to time.

4. No agency commission is payable under the above LOC. However, if required, the exporter may use his own resources or utilize balances in his Exchange Earners’ Foreign Currency Account for payment of commission in free foreign exchange. Authorised Dealer Category- l (AD Category-l) banks may allow such remittance after realization of full payment of contract value subject to compliance with the prevailing instructions for payment of agency commission.

5. AD Category-I banks may bring the contents of this circular to the notice of their exporter constituents and advise them to obtain full details of the Line of Credit from the Exim Bank’s office at Centre One, Floor 21, World Trade Centre Complex, Cuffe Parade, Mumbai 400 005 or log on towww.eximbankindia.in

6. The Directions contained in this circular have been issued under sections 10(4) and 11(1) of theForeign Exchange Management Act (FEMA), 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully,

(A. K. Pandey)

Chief General Manager

FDI may be allowed in sectors with high employment scope : 28-05-2015

Hinting at opening up of more sectors to foreign investment, Prime Minister Narendra Modi on Wednesday said areas with high employment potential and strong local talent would be the focus to woo foreign investment and expressed confidence that reforms measures like the Goods and Services Tax (GST) and land acquisition Bill will be passed in “a matter of time”.

On the land Bill, which the government wants to push early but has now been referred to a parliamentary committee, he said the government would accept any suggestions that benefit “Gaon, Garib, Kisan (village, poor and farmer)”.

In a wide-ranging interview to PTI, Modi asserted that measures already taken in past one year had increased the attractiveness of India as an investment destination and investor confidence had improved.

He also dismissed suggestions of differences between finance ministry and Reserve Bank saying the central bank has its functional autonomy which the government “will always respect and preserve”.

“Wherever there is high employment potential and wherever we have strong local talent, for example, in research and development: those will be the areas of focus for foreign direct investment (FDI).

“We have created the National Infrastructure Investment Fund. This is a major step which will increase the flow of foreign investments into all infrastructure sectors, without needing separate sector-by-sector approaches,” he said.

Asked whether obstacles to reforms measures like GST Bill and amendment to Land Acquisition Bill was hurting the economy, the Prime Minister said both the GST and the proposed Land Acquisition Bill were beneficial for the country.

“The core essence of these Bills should be appreciated by all the parties keeping aside political motives. Long term interest of the nation should be foremost.”

“The fact that the States have agreed to the GST design, shows the maturity of our federal system and the GST Bill has already been passed by the Lok Sabha. It is a matter of time before these laws are passed,” he said.

To a question what kind of a message would it send to foreign investors if reform measures are not pushed fast, the Prime Minister said, “One of the peculiarities of Delhi is that the term ‘reform’ is associated only with passing of laws in Parliament.

“In fact, the most important reforms needed are those without new laws at various levels of Government, in work practices and procedures.”

Modi said the government has initiated a number of major reforms which include decontrol of diesel prices, direct transfer of cooking gas subsidy, enhancement of FDI limits, revamping of railways and many others.

“The truth is that reform has actually been pushed very fast and in fact as a result FDI has already witnessed an increase of 39 per cent in the period April, 2014 to February, 2015 compared to the previous year,” he said.

He also maintained that the success of steps that the government had taken and the positive response of the people to them in the first year “have encouraged us to do even more”.

“Our focus will be on P2G2, i.e. Pro-active, Pro-people Good Governance reforms. Another aspect we will emphasize and strengthen is that the State and the Centre are one team which has to work together for reforms to be effective,” he said.

Asked about reports of RBI and finance ministry on the same page on issues, Modi said, “I am surprised that an important and credible media agency like PTI is drawing an incorrect inference based on remarks made in different contexts. RBI has its functional autonomy which the Government and the Finance Ministry always respect and preserve”.

On the economic growth prospects for the current year, Modi said based on experience of the last year and the enthusiasm of the people give confidence that all economic indicators will exceed the targets.

“I do not want to undermine the potential and the efforts by giving any figure which may turn out to be too low,” he said.

To a question about Opposition accusation that the government was pro-corporates while some in industry like Deepak Parekh say nothing is happening on ground, he said, “The answer is to be found in your question itself. If opponents are accusing us of being pro-corporate but the Corporates are saying we are not helping them, then I take it that our decisions and initiatives are pro-people and in the long term interests of the nation”.

On the issue of making progress on the BJP’s election promise on stringent action against back blackmoney, he said the very first decision of the Government after taking office was to constitute the Special Investigation Team to pursue black money.

“This step had been pending for years with no action and we executed it in our very first Cabinet meeting.

Subsequently, we have also brought a new Bill which will combat black money held abroad and it prescribes stiff penalties.

“Thanks to our efforts, an agreement was reached at the G-20 summit in November 2014 to curb tax evasion and in particular to exchange information between countries. This will help us to trace black money. These are very strong and concrete actions,” he said.To a question on the agrarian crisis in the country, the Prime Minister said suicide by farmers has been a serious concerns for several years.

“Political point-scoring through comparing how many suicides occurred under which government will not solve the problem. For a government of any party, and for every one of us, even one suicide is worrisome,” he said.

WHAT MODI SPOKE

Dismisses suggestions of differences between finance ministry and RBI, saying the central bank has its functional autonomy which the govt ‘always respects and preserves’

On GST Bill and amendment to land Bill, he said core essence of these should be appreciated by all the parties keeping aside political motives. Long term interest of nation should be foremost

On what’s next, he said that success of steps that the govt had taken and the positive response of the people to these in the first year ‘have encouraged the govt to do even more’

Source : The Economic Times

CAG to audit coal e-auction, results in 6 months : 28-05-2015

The Comptroller and Auditor General (CAG) of India will audit the recently concluded two rounds of coal block e-auction. The audit is likely to be completed in six months.

The audit would review the conditions set for the auctions and the reserve prices decided by the government for various blocks. Sources said details and files pertaining to the auction had been sought.

The audit is also expected to review the decision by the government to let companies put multiple bids through subsidiaries or various units.

Neither the CAG nor the coal ministry officially responded to queries on the audit.

The National Democratic Alliance (NDA) government had claimed that the auctions would generate Rs 2.85 lakh crore over the duration of the mining.

Two rounds of bidding for coal blocks were conducted between February 14 and March 8, 2015, and 40 mines were awarded. A decision to auction the mines was taken after the Supreme Court had in August 2014 cancelled 204 coal block allocated by the previous United Progressive Alliance and NDA governments.

Among the coal blocks earmarked for negative bidding for the power sector, all companies bid either at or below the reserve price of Rs 100 a tonne. The government had claimed this would save consumers Rs 90,000 crore in power bills. The power ministry had told the Central Electricity Regulatory Commission the revision of tariff should not lead to higher total tariff than what was permitted under the existing power purchase agreements.

In case of the unregulated sectors — steel, aluminium and iron ore — the auctions were done on the basis of forward bidding, with the highest bidder winning the block.

After reviewing nine winning bids, the coal ministry cancelled three blocks (won by two companies), claiming the bids had not attained a fair value but claimed the process had been transparent. The two companies, Jindal Power (with two blocks) and BALCO, moved the Delhi High Court to contest the government’s decision.

The bids for good quality blocks were in some cases found to be lower than the similar ones in other cases. Though the government cancelled the winning bids in three cases, it continued to claim that the companies were best placed to make their best bids and it was not for it to judge or review.

Apart from this, 41-odd cases have been filed by various companies on every step of the coal block re-allocation process. There have been independent requests to investigate the bidding of the players who bid too low or when bidding concluded in too less time.

The ministry is currently planning a third round of auction of blocks. It is also planning e-auction of coal linkages and also opening up some blocks to commercial mining.

Source : PTI

National IPR Policy to be delayed further : 28-05-2015

The much-awaited National Intellectual Property Rights (IPR) Policy might be delayed further, with the draft getting stuck at the inter-ministerial consultation level and inputs from key ministries yet to come.

The department of industrial policy and promotion (DIPP), under the ministry of commerce and industry, had prepared and circulated the draft policy and invited public comments last year. The draft is now with ministries, which were expected to respond with feedback by the middle of this month.

The ministries whose inputs are crucial for the policy but are yet to respond include finance, external affairs, health and family welfare, commerce and the departments of pharmaceuticals.

An official said on condition of anonymity the department of pharmaceuticals and the ministry of health and family welfare have apparently locked horns with the draft policy.

DIPP is optimistic that it can collate all feedback by the month-end, a senior official told Business Standard. “We did our work and the draft policy was ready on time. The draft has now been circulated for consultations. Some of key ministries are yet to respond, and we have given them until the end of May to do so.”

Minister for commerce and industry Nirmala Sitharaman had announced in September last year that the government would roll out a National IPR Policy “soon”. However, the government, which has been on office for a year now, is yet to roll out a policy to safeguard the country’s national interests and bring greater clarity to intellectual property and patent laws.

India had come under pressure from the US, the drug manufacturers there, which believe the country has a weak IPR and patents regime.

“The draft policy was an important statement from the government on the work it is doing in the IPR front,” said Patrick Kilbride, executive director, Global Intellectual Property Center, US Chamber of Commerce. “It is an important starting point. However, patents still remain a big concern for the US as far as affordable medicine is concerned. Many American companies have been denied patents in India. This is keeping new and affordable medicines off the Indian markets. This is anti-competitive.”

Ranjana Smetacek, director-general of the Organisation of Pharmaceutical Producers of India, said the government should come out with a robust policy, after investing so much time on it. In its latest Special 301 IPR report, the US trade representative had again kept India under the category of ‘Priority Watch List’ and threatened to take “further actions” if the intellectual property climate does not improve.

Source : Business Standard

India to sign G20 pact on June 3, will get more data on bank accounts : 27-05-2015

NEW DELHI: Months after it failed to sign the G20 information sharing agreement, India is set to sign the global treaty on June 3 which will enable it to access data related to bank accounts from across the world, including tax havens that were earlier refusing to cooperate.

While information under the agreement, finalized at the Organisation for Economic Cooperation and Development (OECD), will start flowing in from 2017, the government is also ready to sign Foreign Account Tax Compliance Act (FATCA) with the US, which will be effective from September and is expected to result in additional data flow, sources said. Presently the modalities of the FATCA are being worked out with the US.

Both the agreements had o be signed last year but the government had to drop its plans at the last minute in the wake of a Supreme Court observation related to confidentiality clause in the treaties as well as double taxation avoidance agreements. But with the legal hurdle out of the way, the Cabinet has now endorsed the two pacts. India has been at the forefront of the efforts at OECD to get countries to share all bank information with tax authorities on an annual basis.

Currently , countries can seek information from others but the new mechanism will allow automatic exchange of information on an annual basis, which will include the account balance and all income that has accrued during the course of the year.

Source : The Economic Times

Threshold for service tax is based on current, last year’s turnover : 27-05-2015

Anybody who provides a service is liable to pay service tax. These could be professionals like lawyers, doctors, chartered accountants or owners of beauty parlours, coaching classes, fitness centres, etc. But unlike income tax, service tax is not charged automatically and there are some exemptions.

If you are a small entrepreneur providing a service, you have to pay service tax to the government once the amount billed to customers or turnover crosses Rs 10 lakh in a year.

From June 1, service tax will increase to 14% from 12.36%.

The service provider has the option of not registering for service tax as long as the amount billed to customers does not cross Rs 9 lakh in a year. But there are some advantages of registering, even if your billed amount is less than Rs 9 lakh. For instance, government departments or offices looking for any kind of service, typically insist on registered service providers, says Sanjeev Gokhale, a Mumbai-based Chartered Accountant.

So, if you own a company that provides housekeeping services and are vying for a government project, it is better to register yourself with service tax authorities to avoid getting rejected.

Even after registering, you don’t have to pay service tax till the billed amount crosses Rs 10 lakh in a year. But once it does then you have to pay service tax.

The threshold value for service tax is calculated taking into account the previous year’s turnover as well as the current year’s turnover.

So, assuming the aggregate value of your or your firm’s services is Rs 11 lakh for the year 2014-15. You have to pay service tax since the threshold value of Rs 10 lakh has been exceeded.

If the value of services for 2015-16 crosses Rs 8 lakh, you still have to pay service tax, since the aggregate value of service is calculated on the previous year. Then if in 2016-17, the aggregate value of service comes to Rs 7 lakh, then you have the option of not paying service tax, because in the previous year (2015-16) the threshold was less than Rs 10 lakh (Rs 8 lakh in this case). But if in 2016-17, the aggregate value of service exceeds Rs 10 lakh, then you will have to pay service tax.

This exemption of not paying service tax is given to small-scale entrepreneurs so that they are not forced to increase charges to their customers.

But if you charge your customers service tax, then you are liable to pay the same to the government, even if your turnover does not increase Rs 10 lakh, says Bipin Sapra, tax partner, EY.

“One way businesses try to reduce their tax burden is by splitting their companies or firms and keeping the turnover below Rs 10 lakh,” Sapra says.

Another condition to keep in mind is that if you are the franchise of a chain, then you are liable to pay service tax from day one, irrespective of the turnover. Taking the same example of a beauty parlour, if it is a standalone one, service tax is applicable only if the aggregate value of service crosses Rs 10 lakh. But if it is a franchise of a chain, say, L’oreal, then service tax is applicable from day one.

“The rationale behind this is that as franchise of a big chain, you already have an advantage of a big brand. Whereas the exemption is given only to encourage small-scale entrepreneurs,” Sapra says.

To reduce the tax burden, many salon owners carve out a separate premises for the bigger brand and register it as a separate entity.

Today, service tax is paid online. For a company the payment has to be done monthly and for propriety or partnership firms on a quarterly basis. The returns have to be filed on a half-yearly basis.

1% tax above GST may hurt Make in India: CEA : 27-05-2015

Chief Economic Advisor Arvind Subramanian has criticised the proposal to impose a one per cent levy over the Goods and Services Tax (GST) to help manufacturing states.

The government should reconsider this levy as it could make intra-state movement of goods expensive and hurt the Make in India campaign, he told reporters here on Tuesday. “Think of a good going from Gujarat to Tamil Nadu, crossing four states. The good would embody an additional tax of about four-five per cent, because it is one per cent in every state. That might make it easier to import into Tamil Nadu from Bangkok,” Subramanian said.

The chief economic advisor (CEA) also said the time was right for the Reserve Bank of India (RBI) to cut the policy rate as inflation had moderated and the fiscal deficit was contained.

To address manufacturing states’ concerns, the Constitution amendment Bill on GST had provided for an additional one per cent tax for two years. The tax was proposed to bring on board manufacturing states, as these were against the destination-based GST. The Bill has been referred to a Rajya Sabha select committee, which is expected to submit its report at the beginning of the next session of Parliament. The Lok Sabha had cleared the Bill.

“It (the one per cent additional tax) has the potential to undermine Make in India. That is why we need to look at this provision carefully. This period that we have gained, some of these issues need to be looked at again,” Subramanian said. The government plans to roll out GST from April 2016.

On repo rate, he said: “Looking at the analysis of what is the inflation forecast, what is the fiscal consolidation, what is the international environment … and how the monetary policy should respond, I think there is scope for monetary easing.” RBI is scheduled to announce its second bi- monthly policy on June 2.

Subramanian said: “Inflation…is going to be lower than the RBI’s target. Fiscal policy is supportive and that (will have) implications for interest rates.”

Since January, RBI has cut the key policy rate or repo rate twice, by 0.50 per cent, to 7.5 per cent as inflationary pressures eased. Adequate food stocks would help contain inflation, even if the monsoon turns out to be weak, Subramanian said. The meteorological department had said monsoon would be slightly below normal. But private weather forecaster Skymet had said it would be close to excess.

Subramanian said India should take action to keep its currency competitive, in view of the aggressive rate cut policy of China and other countries.

“It is not that everything that China does should be imitated but that’s a lesson we need to learn….” Moreover, he added, most countries are trying to keep their currencies competitive and cheap. “The question is how should we respond. We should take defensive action. At the very least, we should not allow our currency to become more uncompetitive. We should keep it (Rupee) competitive if we want Make in India to be a long-term success. We have to have a very supportive currency policy.”

1. Short title and commencement.-These Regulations may be called the Foreign Exchange Management (Permissible Capital Account Transactions) (Third Amendment) Regulations, 2015.

(ii) They shall come into force from the date of their publication in the Official Gazette.

2. Amendment to the Regulations.-In the Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000, in Regulation 4, in sub-regulation (a), for the existing provisos, the following shall be substituted:-

“PROVIDED that-

(a) subject to the provisions of the Act or the rules or regulations or directions or orders made or issued thereunder, a resident individual may, draw from an authorized person foreign exchange not exceeding USD 250,000 per financial year or such amount as decided by Reserve Bank from time to time for a capital account transaction specified in Schedule I.

Explanation: Drawal of foreign exchange as per item number 1 of Schedule III to Foreign Exchange Management (Current Account Transactions) Rules, 2000 dated 3rd May, 2000 as amended from time to time, shall be subsumed within the limit under proviso (a) above.

(b) Where the drawal of foreign exchange by a resident individual for any capital account transaction specified in Schedule I exceeds USD 250,000 per financial year, or as decided by Reserve Bank from time to time as the case may be, the limit specified in the regulations relevant to the transaction shall apply with respect to such drawal.

PROVIDED FURTHER that no part of the foreign exchange of USD 250,000, drawn under proviso (a) shall be used for remittance directly or indirectly to countries notified as non-cooperative countries and territories by Financial Action Task Force (FATF) from time to time and communicated by the Reserve Bank of India to all concerned.”

B. P. KANUNGO, Principal Chief General Manager

Foot Note : The Principal Regulations were published in the Official Gazette vide No. G.S.R. No. 384(E) dated May 5, 2000 in Part II, Section 3, sub-section (i) and subsequently amended vide:

G.S.R. 426(E).-In exercise of the powers conferred by section 5 and sub-section (1) and clause (a) of sub-section (2) of section 46 of the Foreign Exchange Management Act, 1999 (42 of 1999), and in consultation with Reserve Bank, the Central Government having considered it necessary in the public interest, makes the following amendment to the Foreign Exchange Management (Current Account Transactions) Rules, 2000, namely:-

“5. Prior approval of Reserve Bank.-Every drawal of foreign exchange for transactions included in Schedule III shall be governed as provided therein:

Provided that this rule shall not apply where the payment is made out of funds held in Resident Foreign Currency (RFC) Account of the remitter.”;

(ii) for Schedule III, the following shall be substituted, namely:-

“SCHEDULE III (See rule 5)

Facilities for individuals-

1. Individuals can avail of foreign exchange facility for the following purposes within the limit of USD 2,50,000 only. Any additional remittance in excess of the said limit for the following purposes shall require prior approval of the Reserve Bank of India.

(i) Private visits to any country (except Nepal and Bhutan).

(ii) Gift or donation.

(iii) Going abroad for employment.

(iv) Emigration.

(v) Maintenance of close relatives abroad.

(vi) Travel for business, or attending a conference or specialised training or for meeting expenses for meeting medical expenses, or check-up abroad, or for accompanying as attendant to a patient going abroad for medical treatment/ check-up.

(vii) Expenses in connection with medical treatment abroad.

(viii) Studies abroad.

(ix) Any other current account transaction:

Provided that for the purposes mentioned at item numbers (iv), (vii) and (viii), the individual may avail of exchange facility for an amount in excess of the limit prescribed under the Liberalised Remittance Scheme as provided in regulation 4 to FEMA Notification 1/2000-RB, dated the 3rd May, 2000 (here in after referred to as the said Liberalised Remittance Scheme) if it is so required by a country of emigration, medical institute offering treatment or the university, respectively:

Provided further that if an individual remits any amount under the said Liberalised Remittance Scheme in a financial year, then the applicable limit for such individual would be reduced from USD 250,000 (US Dollars Two Hundred and Fifty Thousand Only) by the amount so remitted:

provided also that for a person who is resident but not permanently resident in India and –

(a) is a citizen of a foreign State other than Pakistan; or

(b) is a citizen of India, who is on deputation to the office or branch of a foreign company or subsidiary or joint venture in India of such foreign company,

may make remittance up to his net salary (after deduction of taxes, contribution to provident fund and other deductions).

Explanation: For the purpose of this item, a person resident in India on account of his employment or deputation of a specified duration (irrespective of length thereof) or for a specific job or assignments, the duration of which does not exceed three years, is a resident but not permanently resident:

provided also that a person other than an individual may also avail of foreign exchange facility, mutatis mutandis, within the limit prescribed under the said Liberalised Remittance Scheme for the purposes mentioned herein above.

Facilities for persons other than individual -

2. The following remittances by persons other than individuals shall require prior approval of the Reserve Bank of India.

(i) Donations exceeding one per cent. of their foreign exchange earnings during the previous three financial years or USD 5,000,000, whichever is less, for-

(a) creation of Chairs in reputed educational institutes,

(b) contribution to funds (not being an investment fund) promoted by educational institutes; and

(c) contribution to a technical institution or body or association in the field of activity of the donor Company.

(ii) Commission, per transaction, to agents abroad for sale of residential flats or commercial plots in India exceeding USD 25,000 or five percent. of the inward remittance whichever is more.

(iii) Remittances exceeding USD 10,000,000 per project for any consultancy services in respect of infrastructure projects and USD 1,000,000 per project, for other consultancy services procured from outside India.

Explanation:-For the purposes of this sub-paragraph, the expression “infrastructure’ shall mean as defined in explanation to para 1(iv)(A)(a) of Schedule I of FEMA Notification 3/2000-RB, dated the May 3, 2000.

(iv) Remittances exceeding five per cent of investment brought into India or USD 100,000 whichever is higher, by an entity in India by way of reimbursement of pre-incorporation expenses.”

3. Procedure

The procedure for drawal or remit of any foreign exchange under this schedule shall be the same as applicable for remitting any amount under the said Liberalised Remittance Scheme.

Finance Minister Arun Jaitley today asked taxmen to squeeze the parallel economy but gave an assurance that while doing so honest taxpayers may have nothing to fear about the new black money law.

“The parallel economy has to be squeezed…and (it) has to be done in very fair manner, not in a harsh manner. In doing so, as senior officers you have to… maintain the highest standard of integrity,” he said while addressing a conference of top officials of the Central Board of Direct Taxes (CBDT).

On the new black money law which seeks to bring back the illicit funds stashed abroad, Jaitley said, “No honest taxpayer has anything to fear. It’s targeted only against those who have stashed assets abroad.”

The minister further told the tax officers, “Every well meaning advisor will tell you, tax base has to be expanded. Black money has to be squeezed out and at the same time if you take steps to do that, you have to listen to the taunt of draconian steps which are being taken.”

The government, the minister said, has taken a host of measures to curb the menace of black money. These include passage of the black money law by Parliament and introduction of Benami Transactions (Prohibition) bill to deal with the unaccounted domestic wealth.

“Black money has to be squeezed”, he said, adding only those who have defied the system in the past and intend to defy the compliance window to come clean have to worry.

Jaitley further said that improvement in tax collection will increase the ability of the government to step up spending on social and infrastructure projects and provide relief to individual taxpayers.

For the current financial year, the minister said, direct tax collection was likely to improve by 14-15 per cent and there was possibility of government improving upon the fiscal deficit target of 3.9 per cent.

However, he added that the government would prefer to increase expenditure on social sector schemes instead of improving its fiscal deficit target.

The objective is not to better fiscal deficit number, he said, adding, “…we want to increase expenditure because increased expenditure leads to growth.”

“We would like larger revenue collections to be invested in areas of infrastructure, irrigation, in the social sectors to bring larger dividends back to the economy.”

As regards black money, the Finance Minister said that several steps have been announced and the government would come out with more measures in future to squeeze the quantum of illicit wealth.

“There are steps which have been announced and some may be announced in future, with regard to squeezing quantum of black money.

“If the base increases, collection increases and those who have to pay taxation are compelled to pay it, the ability of government to give concession, in terms of rates to honest tax payers also increases,” he added.

Observing that there are no grey areas in taxation, the Finance Minister said, “Either a tax is payable or it’s not payable. If it’s not payble no attempt has to be made to recover it but if it is payable then there is no scope for any other collateral consideration why it must not be recovered for the government.”

The policy has to be “crystal clear” that nobody should be harassed, but the evader must not succeed, he said, adding “within the parameters of the policy we continue to do our job…a very unenviable job.”

Government, Jaitley said, has already taken various initiatives on the taxation front which include roll out of the Goods and Services Tax (GST), reduction of corporate tax rate from 30 per cent to 25 per cent over the next four years and removal of exemptions to the extent possible.

As regards indirect taxes, Jaitley said, “The process of introduction of GST is on. A lot of work has been done, a lot of work remains to be done and we have only few months to accomplish the task.”

Rajya Sabha recently referred the GST Bill to a select committee which is expected to give its report to the House at the start of the next session. The government plans to roll out the GST from April 1, 2016.

On direct tax front, Jaitley said, “Our effort over the next four years will be to bring down the taxation to global levels and phase out the exemptions to the extent it is possible.”

Efforts would also be made to expand the tax base and encourage non-filers to file tax returns, he said and added that individual taxpayers would continue to enjoy certain set of exemptions so that they could spend more and add to the economic growth.

“We are also trying to ensure that segments need a certain sets of exemptions so that we can encourage them to spend more. We should all be conscious of fact that even when we talk of expansion of the base, there are in-built limitations,” he said.

“If 55-60 per cent of India lives on agriculture that’s the number of families which are out of tax base. …there are several initiatives which we have taken. Every advisor will tell you, tax base has to be expanded.”

“I do understand that the CBDT is also working on simplification in many areas including the forms which will be a great asset to the taxpayer itself,” the minister said.

Earlier, Revenue Secretary Shaktikanta Das said the Rs 7.98 lakh crore direct collection target for the current fiscal is “very much achievable and very realistic”.

With regard to HSBC list on alleged black money holders abroad, he said all the assessment that had to be completed before March 31, 2015 have been completed.

G.S.R. (E).____In exercise of the powers conferred by sub-rule (3) read with sub-rule (2) of rule 19of the Central Excise Rules, 2002, the Central Government hereby makes the following amendments in the notification of the Government of India in the Ministry of Finance, Department of Revenue, No. 44/2001-Central Excise (N.T.), dated the 26th June, 2001, published in the Gazette of India, Extraordinary, Part II, section 3, Sub-section (i), vide number G.S.R. 473(E), dated the 26th June, 2001, namely:-

1. In the said notification, in the opening paragraph, in sub-paragraph (vii), in clause (a), for the word “Visakhapatnam”, the words “Visakhapatnam, Mundra” shall be inserted.

2. This notification shall come in to force on the date of its publication in the Official Gazette.

G.S.R. ——-(E).- In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) and sub-section (3) of section 3 of Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (40 of 1978), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India in the erstwhile Ministry of Finance and Company Affairs (Department of Revenue) No. 22/2003-Central Excise, dated the 31st March, 2003, published in the Gazette of India Extraordinary, Part II, Section 3, sub-section (i) vide number G.S.R 265 (E), dated the 31st March, 2003, namely:-

In the said notification,-

(a) in the opening paragraph, in condition (4), in clause (a), for sub-clauses (i) and (ii), the following sub-clauses shall be substituted, namely:-

“(i) in the case of capital goods, such goods are not proved to the satisfaction of the said officer to have been installed or otherwise used within the user industry, within the period of validity of the Letter of Permission (LoP);

(ii) in the case of goods other than capital goods, such goods as are not proved to the satisfaction of the said officer to have been used in connection with the production or packaging of goods for export out of India or cleared for home consumption within the period of validity of the Letter of Permission (LoP);”;

(b) in paragraph 3, for clause (iii), the following clause shall be substituted, namely:-

“(iii) capital goods, raw material, consumables, spares, goods manufactured, processed or packaged, and scrap or waste or remnants or rejects are destroyed within the unit after intimation to Customs authorities or destroyed outside the unit with permission of Customs authorities:

Provided that the remnants, remains or scrap after such destruction, if cleared into Domestic Tariff Area, applicable duty shall be levied on such goods:

Provided further that this provision shall not apply to gold, silver, platinum, diamond, precious and semi precious stones.”;

(c) in paragraph 13, in Explanation, after clause (xiii), the following clause shall be inserted, namely:-

“ (xiv) “Letter of Permission (LoP)” has the same meaning as assigned in Chapter 6 of the Foreign Trade Policy 2015-20 notified by the Government of India in the Ministry of Commerce and Industry, published in the Gazette of India, Extraordinary, Part-II, Section 3, Sub-section (ii) vide notification No. 01/2015-2020, dated the 1st April, 2015.”.

The Reserve Bank of India (RBI), as it approaches its review of monetary policy on June 2, will have noted that, as shown in Table 1, both wholesale and retail inflation have been steadily declining. Wholesale Price Index (WPI)-based inflation, in fact, is now in negative territory. As shown in Table 2, this reflects a moderation of food inflation – and a feared increase in food inflation as unseasonable rain has not come to pass. Meanwhile, news from the output side of the economy is not great. The index of industrial production, shown in Table 3, continues to be anaemic. Net profit percentage for India Inc has failed to recover solidly, as shown in Table 4. One of the major reasons is a steadily increasing percentage of interest costs, as shown in Table 5. Credit growth, as shown in Table 6, has also failed to pick up and is still hovering two percentage points below deposit growth.

RBI, however, will also take note of the impact of rates on the rupee and competitiveness. India’s inflation, while decisively lower now than Indonesia’s or Russia’s, is still well above the global norm including that of a country like Vietnam, as shown in Table 7. Fund flows into India, as shown in Table 8, appears to have declined in the very recent past. Table 9 shows the downward trend of the rupee against the dollar.

NEW DELHI: The Narendra Modi government is considering a “painless” revamp of the kerosene subsidy to complete the fuel pricing reforms that have resulted in significantly reducing the burden on the exchequer.

A plan prepared by the Expenditure Management Commission (EMC) is being examined as one of many options, a senior government official told ET. Chief Economic Advisor Arvind Subramanian has been asked to evaluate the formulation, which acknowledges the need for subsidised fuel to the rural poor. The key aim of the plan is reducing pilferage and a gradual shift to direct benefit transfer.

The oil marketing companies made a total loss of Rs 24,799 crore in FY15 for selling kerosene at below cost. In addition, the government provided a few thousand crore rupees for kerosene sold through the public distribution system. The oil companies currently sell kerosene at a loss of Rs 16.32 per litre. The EMC called for reforming subsidies that cater to the poor without hurting them in its January interim report.

It sought a scientific estimation of kerosene consumption based on National Sample Survey Organisation (NSSO) data for the allocation of quotas to states. States are responsible for the distribution of subsidised kerosene through the public distribution system, widely known to be prone to leakages.

Even with a 30-40% increase over NSSO consumption numbers, the government could easily bring down its kerosene subsidy bill substantially because the fuel will only go to those who deserve it. Kerosene consumption has been steadily declining with wider availability of cooking gas and electricity–consumption declined to 70.8 lakh tonnes in FY15 from 102.3 lakh tonnes in FY04. The fuel is used in rural areas for both lighting and cooking.

A switch to direct benefit transfer as in the case of LPG could drive this down further. A pilot scheme in Alwar district of Rajasthan saw a 67% cut in demand for kerosene under the direct benefit transfer system, indicating the extent of its diversion for fuel adulteration.

A key difficulty has been overcome thanks to the Pradhan Mantri Jan Dhan Yojana providing extensive banking coverage. Most households now have a bank account that can be used for direct transfer of subsidies and other social benefits. The kerosene subsidy reform is part of a wider strategy to bring to an end so-called ‘underrecoveries’, which refer to the difference between the market price of fuel and the subsidised rate.

Diesel and petrol are no longer subsidized. The cooking gas subsidy is being given directly to bonafide consumers through their Aadhar-linked bank accounts. Everyone else buys at the market price.

Eventually, the same thing will be done for kerosene. Expenditure secretary Ratan Wattal had said earlier that the government is looking at reforming the kerosene subsidy.

NEW DELHI: Terming NPAs at 5.2 per cent as high, Finance Minister Arun Jaitley today said it’s too early to consider the improvement in the bad loan situation last quarter as a “turnaround” and was keeping his fingers crossed.

“I would take it (drop in March quarter NPAs) only as an initial indicator. At times, when you try to revive the economy, some indicators can always be patchy… I am not drawing any final conclusion from this,” Jaitley said

“If this pattern continues over 2-3-4 quarters, then I will draw a conclusion that there is a pattern. I am keeping my fingers crossed,” he said.

Addressing a press meet on one year of the Modi government, he said: “A good signal has emerged that the quarter that ended in March 2015, NPAs have started coming down… This is the first quarter, NPAs in banks were increasing, they have started coming down.”

Non-performing assets or bad loans of the total advances had reached a high of 5.64 per cent but period ending March “it has come down to 5.2 per cent… these (5.2 per cent NPA) are also high”, he said.

From the decline in one quarter it cannot be concluded that this was a turnaround, he said.

As of December 2014, gross NPAs of PSU banks were at Rs 2,60,531 crore or 5.6 per cent of the total advances.

Echoing similar views the Reserve Bank Governor Raghuram Rajan had had said last week that there was no danger of any financial crisis but it may be early to declare that the worst was over on the NPA front.

The Governor said resolution of NPAs will be possible only with higher economic growth, which he termed as “slow” and the actions which the banks take.

The Finance Minister too said that when economy picks up, a “turnaround has to take place” in the banking sector.

G.S.R. 326(E).-In exercise of the powers conferred by clause (a) of sub-section (1), sub-section (3) of Section 7 and sub-section (2) of Section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999) and in partial modification of its Notification No.FEMA.23/2000-RB dated May 3, 2000 as amended from time to time, Reserve Bank of India makes the following amendment in the Foreign Exchange Management (Export of Goods and Services) Regulations, 2000, as amended from time to time, namely:

1. Short title and commencement.-

(i) These Regulations may be called the Foreign Exchange Management (Export of Goods and Services) (Amendment) Regulations, 2015.

(ii) They shall come into force from the date of publication in Official Gazette.

In Regulation 3, for the Sub-Regulation (1), the following shall be substituted, namely:-

(i) “(1) In case of exports taking place through Customs manual ports, every exporter of goods or software in physical form or through any other form, either directly or indirectly, to any place outside India, other than Nepal and Bhutan, shall furnish to the specified authority, a declaration in one of the forms set out in the Schedule and supported by such evidence as may be specified, containing true and correct material particulars including the amount representing –”

“Form SDF: To be completed in duplicate and appended to the shipping bill, for exports declared to Customs Offices notified by the Central Government which have introduced Electronic Data Interchange (EDI) system for processing shipping bills notified by the Central Government.”

B. P. KANUNGO, Principal Chief General Manager

Foot Note : The Principal Regulations were published in the Official Gazette vide G.S.R. No.409 (E) dated May 8, 2000 in Part II, Section 3, Sub-section (i) and subsequently amended vide.

G.S.R. No. 199 (E) dated March 21, 2001

G. S. R. No. 473 (E) dated July 8, 2002

G. S. R. No. 773 (E) dated September 29, 2003

G. S. R. No. 900 (E) dated November 22, 2003

G. S. R. No. 279 (E) dated April 23, 2004

G. S. R. No. 352 (E) dated June 8, 2004

G. S. R. No. 576 (E) dated August 5, 2008

G. S. R. No. 896 (E) dated December 17, 2012

G. S. R. No.342 (E) dated May 29, 2013

G. S. R. No.362 (E) dated May 27, 2014

G. S. R. No.434 (E) dated July 8, 2014

Taxing premature PF withdrawals of over Rs 30k may be kept in abeyance : 22-05-2015

NEW DELHI: The finance ministry is reconsidering its Budget provision to tax premature provident fund (PF) withdrawals of Rs 30,000 or more, even as the Finance Act of 2015 has been notified and deduction of tax at source from PF accounts settled before five years of service, comes into force on June 1.

“The government is mulling two options to hold back the implementation of this tax, after the PF office pointed out that it would be unfair to tax retirement savings of people whose income is less than the personal income tax threshold of Rs 2.5 lakh,” said a senior government official. The finance ministry, the official said, may issue a directive to put the implementation of this clause in the Finance Act in abeyance or raise the Rs 30,000 trigger for tax deductions from PF accounts.

While a decision is expected by the end of this month, the PF department has asked all offices to gear up for deducting tax from all premature PF claims settled from June 1.

“Tax will be deducted at 10% if members submit their PAN card details and at the maximum marginal tax rate of 34.608% if a member fails to submit PAN. Only in cases where a member submits Form 15G or 15H, no tax will be deducted,” the official said.

Form 15G is a self-declaration document for individuals having non-taxable income, while Form 15H is a similar declaration by senior citizens (over the age of 60 years). However, these forms won’t be accepted as a valid defense for avoiding tax deductions in case of PF accounts with balances of Rs 2.5 lakh (for those with no taxable income) and Rs 3 lakh for retirees.

The Employees’ Provident Fund Organisation ( EPFO) has also said that no tax will be deducted if the PF savings are transferred to another PF account. Similarly, if an employee had to leave service due to ill health or other factors beyond their control such as a slowdown or shutting down of the employer’s business, no tax will be deducted on their PF withdrawals.

Personal income tax is payable for those earning Rs 2.5 lakh or more annually. An EPF account is mandatory for all employees earning up to Rs 15,000 per month in firms employing over 20 workers. As per the law, 24% of an employee’s salary is diverted to her or his PF account.

NEW DELHI: BJP President Amit Shah said there was little scope for the Narendra Modi government to make more changes to the land acquisition Bill and that the legislation in its current form balances the rights of farmers and development. He rejected allegations of bias towards companies.

“I don’t see any pro-corporate element in this. It is a reality that for development you need land, and land will come from the farmer,” Shah told ETin an interview on Thursday. “The government’s duty is to give the right compensation to the farm-

Shah strongly defended the government’s performance, saying it had managed to repair some of what he termed was the harm inflicted by the previous United Progressive Alliance administration. “People had lost faith in the government and the bureaucracy,” he said. “Even the judiciary did not have faith in the system due to which, in several cases, the judiciary also made-…valid interventions. I believe that the damage-control exercise that should be done has been done.” He said the Modi government’s moves had helped slow down inflation while ensuring faster growth. Shah said BJP had pledged to root out corruption. “In 10 years of UPA rule, (there were) Rs 12 lakh crore worth of scams but in the past one year there’s not been a single scam,” Shah said.

“We have run the government in a transparent manner. The earlier government had come to power on the promise of ending price rise within 100 days but failed to do so in 10 years.” He also said the Modi government would not use the Central Bureau of Investigation as a tool to drum up political support for crucial Bills.

“Some say that this (resistance by the Opposition) is happening as we do not misuse CBI,” Shah said. “If CBI is used to manufacture majority and this is given the beautiful term of ‘floor management’, then at least BJP does not believe in it.” Shah also distanced himself from provocative statements made by BJP and Sangh Parivar leaders in the past year that had put the government in an awkward situation. “Some such leaders were also served notices and they have replied.

These replies will be given to the party’s disciplinary committee, which will look into them. But to say that progress has been affected by these remarks is not correct. The pace of building roads or providing power to people has not slowed due to them,” he said.

G.S.R. (E). - In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), read with sub-section (3) of section 85 of Finance Act, 2005 (18 of 2005), the Central Government on being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 6/2005-Central Excise, dated the 1st March, 2005, published in the Gazette of India, Extraordinary, vide number G.S.R. 126(E), dated the 1st March, 2005, namely :-

In the said notification, in the Table, S. No. 1A and the entries relating thereto shall be omitted.

2. In terms of A.P. (DIR Series) Circular No. 25 dated September 3, 2014, recognised non-resident ECB lenders may extend loans in Indian Rupees subject to, inter alia, the lender mobilising Indian Rupees through a swap undertaken with an AD Cat-I bank in India. To facilitate ECB lending denominated in INR by overseas lenders, it has now been decided that such lenders may enter into swap transactions with their overseas bank which shall, in turn, enter into a back-to-back swap transaction with any AD Cat-I bank in India as per the procedure given below:

(i) The recognised non-resident lender approaches his overseas bank with appropriate documentation as evidence of an underlying ECB denominated in INR with a request for a swap rate for mobilising INR for onward lending to the Indian borrower.

(ii) The overseas bank, in turn, approaches an AD Cat-I bank for a swap rate along with documentation furnished by the customer that will enable the AD bank in India to satisfy itself that there is an underlying ECB in INR (scanned copies would be acceptable).

(iii) A KYC certification on the end client shall also be taken by the AD bank in India as a one-time document from the overseas bank.

(iv) Based on the documents received from the overseas bank, the AD bank in India should satisfy itself about the existence of the underlying ECB in INR and offer an indicative swap rate to the overseas bank which, in turn, will offer the same to the non-resident lender on a back-to-back basis.

(v) The continuation of the swap shall be subject to the existence of the underlying ECB at all times.

(vi) On the due date, settlement may be done through the Vostro account of the overseas bank maintained with its counterparty bank in India.

(viii) The concerned AD Cat-I bank shall keep on record all related documentation for verification by Reserve Bank.

3. AD Category – I banks may bring the contents of this circular to the notice of their constituents and customers.

4. The directions contained in this circular have been issued under sections 10(4) and 11(1) of theForeign Exchange Management Act 1999 (42 of 1999) and are without prejudice to permissions/approvals, if any, required under any other law.

2. On a review of the permitted transactions under the Rupee Drawing Arrangements (RDAs), it has been decided to increase the limit of trade transactions from the existing ₹ 5,00,000/- (Rupees Five Lakh only) per transaction to ₹ 15,00,000/- (Rupees Fifteen Lakh only) per transaction, with immediate effect.

3. Further, it has been decided to permit AD banks to regularise payments exceeding the prescribed limit under RDA provided that they are satisfied with the bonafide of the transaction. Further they must take additional steps as under:

AD banks must ensure the remittances received under RDA are from FATF compliant countries,

KYC/AML/CFT and other due diligence concerns should be taken care of by AD banks,

Individual Exchange Houses which are frequently sending large value trade related remittances must be reviewed and reported to the Reserve Bank of India,

AD banks must contact their correspondents that maintain accounts for, or facilitate transactions on behalf of Exchange Houses in order to request additional information regarding high value trade related transactions and the parties involved. The collected details should be kept on record and it may be made available for scrutiny,

AD banks must ensure that the proceeds of export payment through RDA is applied to the outstanding export finance if any, availed by the exporter from any bank for the concerned export transaction and obtain a declaration to that effect from the exporter.

5. AD Category – I banks may bring the contents of this circular to the notice of their constituents concerned.

6. The directions contained in this circular have been issued under Section 10(4) and Section 11(1)of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

RBI Governor Raghuram Rajan said in the minds of the people, Narendra Modi’s image was that of ‘Ronald Reagan on a white horse’ coming to slay anti-market forces…

The expectations from the Narendra Modi government when it came to power last year were “probably unrealistic” but it has taken steps to create an environment for investment and is “sensitive” to concerns of investors, RBIGovernor Raghuram Rajan has said.

“This government came in with tremendous expectations and I think the kind of expectations were probably unrealistic for any government,” Rajan said responding to questions after his address to the Economic Club of New York yesterday.

He said in the minds of the people, Prime Minister Narendra Modi’s image was that of “Ronald Reagan on a white horse” coming to slay anti-market forces and such comparison was “probably not appropriate.”

Rajan, however, said the government has “taken steps to create the environment for investment, which I think is important.”

The government is “sensitive” to the concerns of investors and is looking into addressing economic issues, he said.

Rajan’s remarks come as the Modi-led government completes one year in office this month, having received a commanding majority from an electorate that wanted jobs, economic development and respite from rising prices and corruption.

The Reserve Bank of India Governor said a “big part” of the business environment is taxes and the government has said it will not bring retrospective taxation again.

“However once the tax authority levies a demand on you, there is a quasi-judicial nature of that proceeding and therefore it has to go through the courts before it is resolved. The government cannot intervene,” Rajan said.

“Legacy issues are winding their way through the courts, including issues based on laws that existed before they were changed,” he said.

The corporate tax rate will also come down one per cent every year going forward, he added.

The former International Monetary Fund chief economist said “perhaps” India could have done a “better job” in handling these issues but “going forward the government says no more of this kind of stuff we will do.”

Rajan said there are several areas where the government has taken more “serious and significant” advances to improve investor confidence and propel growth.

On the issue of subsidies, he said petrol and diesel subsidies have gone.

“Going forward these subsidies will be transferred directly into bank accounts,” he said, adding that already the cooking gas subsidy is being transferred directly to bank accounts.

Rajan said there is a “broad consensus” for the Goods and Services Tax (GST) and while he had hoped for the GST Bill to have passed in the just concluded session of Parliament, he feels there is “enough momentum” that “it will be done well in time and roll out by March 31 or April 1 next year.”

“In fact (the government) is going ahead with the apparatus to ensure that it is actually done,” Rajan said.

Another key legislation that the government is focussing on is the Land Acquisition Bill, which is important from the perspective of certain public works, Rajan said.

He said that since different states have their own land acquisition bills, some commentators have suggested the possibility that the states should decide for themselves as to how to implement their respective land acquisition provisions.

There are tremendous plans for investment, particularly in the Mumbai-Delhi industrial corridor and freight corridors, the RBI Governor said.

“My sense is that things are happening,” he said.

Rajan also called the government’s spending cuts “significant,” and said “there has been some amount of fiscal consolidation over and above what the government is owning up to.”

He said inflation “has come down tremendously in India” and rupee has basically stayed relatively flat since the beginning of the year.”

“…if you look at rupee’s volatility relative to other currencies, you’d have to argue that the rupee has been one of the most stable currencies (against) the dollar,” Rajan said.

“It’s been much stronger than other currencies,” he said.

With the Current Account Deficit also projected to come down from more than four per cent to 1.5 per cent this year, Rajan said “the big deficit numbers have come down” and the focus is on growth.

He, however, said while investment intention and investment is picking up, the pace can be faster.

Rajan noted that the problem to some extent lies in the week balance sheet of banks and there is no supply problem as banks are willing to lend.

The government is pushing the banks very hard to clean up the balance sheet and to improve the governance structure of the banks, including separate chairman and Managing Director positions. Banks are also being encouraged to elect new people as Chairman, may be from outside the system, he said.

Source : Business Standard

Service tax: Prepare to shell out 14% for dining out, movies : 21-05-2015

In Budget 2015-16, the government had hiked the service tax to 14 per cent from the current 12.36 per cent.

Come June 1, consumers will have to shell out more for eating out, using credit and debit cards, cabs and mobile phones. The finance ministry on Tuesday notified the increased service tax rate of 14 per cent effective from the next month.However, the Swachchha Bharat Cess is yet to be notified. The government had put an enabling provision in the Service Tax Act to empower the Centre to impose this cess on all or certain taxable services at a rate of 2 per cent. The proceeds from this will be used for Swachh Bharat initiatives.

With the notification, several services including cable and DTH services, beauty parlour charges, courier service, laundry services, ordering stock broking, asset management and insurance will become expensive. In Budget 2015-16, the government had hiked the service tax to 14 per cent from the current 12.36 per cent. “To facilitate a smooth transition to levy of tax on services by both the Centre and the states, the service tax rate is being increased from 12 per cent plus education cesses to 14 per cent.

The education cess and secondary and higher education cess shall be subsumed in the new service tax rate,” finance minister Arun Jaitley had said. However, there are no changes in the abatement rules.

The change in tax rate was done as a step towards GST though a deviation from the recommendation of the 13th finance commission. However, the hike will not impact packaged fruits and vegetables as pre-cooling, ripening, retail packing and labelling of these items was exempted from the service tax in the Budget.

In the Budget negative list was pruned to include services provided by way of access to amusement facility, admission to entertainment events like concerts and pageants if the amount charged for admission is more than Rs 500, admission to circus, dance etc, service by way of carrying out any processes as job work for production or manufacture of alcoholic liquor among others to be chargeable for service tax.

Source : The Financial Express

No. F. No. 134/11/2015-TPL Dated: 21-5-2015

Draft scheme of the proposed rules for computation of Arm’s Length Price (ALP) of an International Transaction or Specified Domestic Transaction undertaken on or after 01.04.2014 – Circular – Dated 21-5-2015 – Income Tax

F. No. 134/11/2015-TPL

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

21st May, 2015

Subject: – Draft scheme of the proposed rules for computation of Arm’s Length Price (ALP) of an International Transaction or Specified Domestic Transaction undertaken on or after 01.04.2014.

Section 92C of the Income Tax Act, 1961 (the “Act”) provides for computation of Arm’s Length Price (ALP) of an international transaction or specified domestic transaction.

2. The Finance Minister in his Budget speech, while introducing the Finance (No. 2) Bill 2014, had made an announcement that “range concept” for determination of ALP would be introduced in the Indian transfer pricing regime however, the arithmetic mean concept will continue to apply where the number of comparables is inadequate. Further, it was announced that use of multiple year data would be permitted for undertaking comparability analysis. Consequent to the announcement, section 92C (2) of the Act was amended by the Finance (No. 2) Act, 2015 to provide that where more than one price is determined by application of the most appropriate method, the arm’s length price in relation to an international transaction or specified domestic transaction undertaken on or after the 1st day of April, 2014 shall be computed in such manner as may be prescribed.

3. Therefore, the manner of computation of ALP is proposed to be provided through the amendment of Income-tax Rules. The proposed mechanism and conditions under which the multiple year data and ‘range’ concept would be used for determination of ALP shall be as under: -

A. Adoption of the Range Concept

i. The ‘Range’ concept shall be used only in case the method used for determination of ALP is Transactional Net Margin Method (TNMM), Resale Price Method (RPM) or Cost Plus Method (CPM).

ii. The following steps would be required to construct the range: -

a) A minimum of 9 entities are required to be selected as comparable entities of the tested party, based on the similarity of their functions, assets and risks (FAR) with that of the tested party;

b) 3-year data of these 9 entities (or more) would be considered and the weighted average of such 3-year data of each company would be used to construct the data set. In certain circumstances, data of 2 out of 3 years could also be used. Thus, the data set or series would have a minimum of 9 data points;

c) For calculating the weighted average, the numerator and denominator of the chosen Profit Level Indicator (PLI) would be aggregated for all the years for every comparable entity and the margin would be computed thereafter; and

d) The data points lying within the 40th to 60th percentile of the data set of series would constitute the range.

iii. If the transfer price of the tested party falls outside the range as constructed above, the median of the range would be taken as ALP and adjustment to transfer price shall be made. If the transfer price is within the range no adjustment shall be made. There shall not be two different data sets – one for testing and one for making adjustments.

B. Use of Multiple Year Data

i. The multiple year data would be used only in case determination of ALP is by Transactional Net Margin Method (TNMM), Resale Price Method (RPM) or Cost Plus Method (CPM);

ii. The multiple year data should comprise three years including the current year i.e. (year in which transaction has been undertaken) and its use for above mentioned methods shall be mandatory;

iii. In case of non-availability of data for 3 years for any of the following reasons: -

Data of the current year of the comparables may not be available on the databases at the time of filing of returns of income by taxpayers;

A comparable may fail to clear a quantitative filter in any one out of the three years; and

A comparable may have commenced operations only in the last two years or may have closed down operations during the current year.

the use of data of two out of relevant three years shall be permitted.

iv. The data of the current year, however, can be used during the transfer pricing audit by both the taxpayer and the department if it becomes available at the time of audit.

C. Continued use of Arithmetic Mean

In cases where ‘range’ concept does not apply, the arithmetic mean concept shall continue to apply in the same manner as it applied before the amendment to section 92C (2) by theFinance (No. 2) Act 2014 alongwith benefit of tolerance range. Further, in cases where multiple year data is to be used, the same would apply whether “range” concept is used or arithmetic mean is used for determining the ALP. Therefore, in such cases the arithmetic mean of the multiple year data of comparable will be considered for computation of ALP.

4. The comments and suggestion of stakeholders and general public on the above draft scheme are invited. The comments and suggestions may be submitted by 31st May, 2015 at the email address (dirtpl1@nic.in or by post at the following address with “Comments on draft transfer pricing rules“ written on the envelop:

Director (Tax Policy & Legislation)-I

Central Board of Direct Taxes,

Room No. 147-D,

North Block,

New Delhi – 110001

New 14% service tax from June 1 : 20-05-2015

The Central Board of Direct Taxes on Tuesday said the newservice tax of 14 per cent would be applicable from June 1.

Now, eating out, using a mobile phone and travelling by air, among other things, would cost more from June.

The notification comes after the passage of the finance Billearlier this month.

The Budget had announced an increase in service tax from 12.36 per cent to 14 per cent for 2015-16. It had also announced widening of the definition of service tax.

This proposal was floated by the government to facilitate the roll out of the national Goods and Services Tax, expected to be rolled out from April 2016.

This step would help the government earn 24.76 per cent more revenues from services at Rs 2.09 lakh crore in 2015-16 against Rs 1.68 lakh crore in the revised estimate for the current financial year.

Source : Business Standard

No. Minutes of the 65th meeting of the SEZ Dated: 19-5-2015

Minutes of the 65th meeting of the Board of Approval for SEZs held on 19th May 2015 to consider proposals for setting up Special Economic Zones and other miscellaneous proposals. – Dated 19-5-2015 – SEZ

he Sixty fifth (65th) meeting of the Board of Approval (BoA) for Special Economic Zones (SEZ) was held on 19th May, 2015 under the Chairmanship of Shri Rajeev Kher, Secretary, Department of Commerce, at 3.00 P.M. in Room No. 47, Udyog Bhawan, New Delhi, to consider proposals in respect of notified/approved SEZs. The list of participants is Annexed (Annexure-1).

Item No. 65.1: Requests for extension of validity of formal approvals

BoA, in its meeting held on 14th September, 2012, while examining similar cases had observed as under: -

“The Board advised the Development Commissioners to recommend the requests for extension of formal approval beyond 5th year and onwards only after satisfying that the developer has taken sufficient steps towards operationalisation of the project and further extension is based on justifiable reasons. Board also observed that extensions may not be granted as a matter of routine unless some progress has been made on ground by the developers. The Board, therefore, after deliberations, extended the validity of the formal approval to the requests for extensions beyond fifth years for a period of one year and those beyond sixth year for a period of 6 months from the date of expiry of last extension”

(i) Request of M/s. Uralungal Labour Contract Co Operative Society Limited (ULCCS Ltd.) for further extension of the validity period of formal approval, granted for setting up of sector specific SEZ for IT/ITES at Nellikode Village, Kozhikode, Kerala, beyond 30th June 2015

The Board after deliberations extended the validity of the formal approval up to 31st December, 2015.

(ii) Request of M/s. Karnataka Industrial Areas Development Board (KIADB) for further extension of the validity period of formal approval, granted for setting up of sector specific SEZ for IT/ITES at Mangalore, Karnataka, beyond 26th June 2015

The Board after deliberations extended the validity of the formal approval up to 26th June, 2016.

The Board after deliberations extended the validity of the formal approval up to 30th June, 2016.

(iv) Request of M/s. Gulf Oil Corporation Limited for further extension of the validity period of formal approval, granted for setting up of sector specific SEZ for IT/ITES/BPO/Electronic Hardware at Kattigenahalli and Venkatala villages, Yelahanka Hobli, Bangalore, Karnataka, beyond 17th June, 2015

The Board after deliberations extended the validity of the formal approval up to 17th June, 2016.

(v) Request of M/s. Vedanta Aluminium Limited for extension of the validity period of formal approval, granted for setting up of sector specific SEZ for Manufacture and Export of Aluminium at village Bhurkamunda & Bhagkipalli Tehsil & District Jharsuguda, Orissa beyond 22nd May, 2015

The Board after deliberations extended the validity of the formal approval up to 22nd May, 2016.

(vi) Request of M/s Kandla Port Trust, developer of multi product SEZ at Kandla and Tuna, Gujarat for further extension of the validity period of formal approval, beyond 6th May 2015

The Board after deliberations extended the validity of the formal approval up to 6th May, 2016.

The Board after deliberations condoned the delay and extended the validity of the formal approval up to 24th June, 2016.

(viii) Request of M/s. Velankani Technology Park (P) Ltd. for further extension of the validity period of formal approval, granted for setting up of sector specific SEZ for Electronic Hardware and Software including ITES at Sriperumbudure, Chennai, Tamil Nadu, beyond 22nd May 2014.

The Board after deliberations condoned the delay and extended the validity of the formal approval up to 22nd May, 2016.

(ix) Request of M/s. Nagarjuna Oil Corporation Ltd., for further extension of the validity period of formal approval, granted for setting up of sector specific SEZ for Pharmaceuticals and Petroleum at Kayalattu Village, Cuddalore, Tamil Nadu, beyond 26th February 2015.

The Board after deliberations extended the validity of the formal approval up to 25th February, 2016.

(x) Request of M/s. Ascendant Estates Pvt. Ltd. for further extension of the validity period of formal approval, granted for setting up of sector specific SEZ for IT/ITES at Village Bhondsi, Tehsil Sohna, Gurgaon, Haryana, beyond 5th November, 2014

The Board noted that the DC, NSEZ had not recommended the proposal for further extension and after deliberations rejected the request for extension of formal approval of the Developer.

(xi) Request of M/s. G.P. Realtors Pvt. Ltd. for further extension of the validity period of formal approval, granted for setting up of sector specific SEZ for Electronic Hardware & IT/ITES at Village Ghata, Behrampur and Balola, Gurgaon, Haryana, beyond 25th January, 2015.

The Board after deliberations extended the validity of the formal approval up to 25th January, 2016.

(xii) Request for further extension of LoA from M/s. Mayar Infrastructure Development Pvt. Ltd. for setting up of Biotechnology SEZ at village Rahaka & Nimoth District Gurgaon, Haryana beyond 13th July, 2015.

The Board after deliberations extended the validity of the formal approval up to 13th July, 2016.

(xiii) Request of M/s. Indiabulls Industrial Infrastructure Limited for further extension of the validity period of formal approval, granted for setting up of multi product SEZ at village Sinnar, District Nashik, Maharashtra, beyond 24th June, 2015

The Board after deliberations extended the validity of the formal approval up to 24th June, 2016 with the condition that the Developer shall furnish necessary clarifications to the State Government of Maharashtra on the issues raised by it.

(xiv) Request of M/s. Navi Mumbai SEZ Private Limited for extension of the validity period of formal approval, granted for setting up of sector specific SEZ for Multi Services at Ulwe, District Raigad, Maharashtra, beyond 26th February 2015.

The Board after deliberations extended the validity of the formal approval up to 26th February, 2016 with the condition that the Developer shall furnish necessary clarifications to the State Government of Maharashtra on the issues raised by it.

(xv) Request of M/s. Navi Mumbai SEZ Private Limited for extension of the validity period of formal approval, granted for setting up of sector specific SEZ for Gems & Jewellery at Ulwe, District Raigad, Maharashtra, beyond 26th February 2015

The Board after deliberations extended the validity of the formal approval up to 26th February, 2016 with the condition that the Developer shall furnish necessary clarifications to the State Government of Maharashtra on the issues raised by it.

The Board after deliberations extended the validity of the LoP up to 8th November, 2016.

(vii) Request of M/s. Marsons Industries Pvt. Ltd., a unit in the sector specific SEZ for Engineering SEZ being developed by M/s. Mahindra World City (Jaipur) Ltd. at village Kalwara, Tehsil Sanganer, Distt. Jaipur, Rajasthan for extension of Letter of Permission (LOP) beyond 12th March, 2015

The Board after deliberations extended the validity of the LoP up to 12th September, 2015.

The Board after deliberations extended the validity of the LoP up to 18th April, 2016.

Item No. 65.4 : Requests for co-developer

Approvals for co-developers are subject to the condition that particular terms and conditions of lease agreement/co-developer agreement will not have any bearing on the treatment of the income by way of lease rentals/down payment/premium etc., for the purposes of assessment under the Income Tax Act and Rules. The Assessing Officer, will have the right to examine the taxability of these amounts under the SEZ Act and Income Tax Act and Rules. This is applicable to all cases of co-developers approved by the BoA in this meeting. The decisions of the BoA on the proposals are as under:-

(i) Request of M/s. Infoparks Kerala for co-developer in the sector specific SEZ for IT/ITES at Muringur Thekkumuri Village, Koratty Panchayathu, Mukundapuram Taluk, Thrissur District, Kerala, being developed by M/s. Kerala State IT Infrastructure Ltd.

After deliberations, the Board approved the proposal of M/s. Infoparks Kerala for codeveloper for construction of 3.3 lakh sqft IT building and utility building, construction of roads, drain, cable trench, ground water sump and sewage treatment plant for the building, over an area of 2.4282 hectares, in accordance with the co-developer agreement entered into with the developer subject to standard terms and conditions as per SEZ Act and Rules provided that the lease period be reduced to a period not exceeding 30 years (Renewable).

(ii) Request of M/s. MSEZ Power Limited for co-developer in Multi Product SEZ at Baikampady, Mangalore, Karnataka, being developed by M/s. Mangalore SEZ Ltd.

After deliberations, the Board approved the proposal of M/s. MSEZ Power Limited for Co-developer to carry on the power distribution activities to the units in the SEZ Zone. The Co-developer has informed that that the power will be procured from Bangalore Electric Supply Company (BESCOM). The power distribution activities are currently being perused by the developer itself and upon receipt of the required co-developer approval, further activities will be carried out by the proposed co-developer MSEZPL, in accordance with the co-developer agreement entered into with the developer subject to standard terms and conditions as per SEZ Act and Rules, provided that the lease period be reduced to a period not exceeding 30 years (Renewable) .

The Board noted that the co-developer had not furnished details of ‘other services’ and that the lease period proposed exceeded 30 years. After deliberations, the Board sought details of ‘other services’ from the developer and deferred the proposal.

After deliberations, the Board approved the proposal of M/s. Sands Infrabuild Pvt. Ltd. for co-developer for IT/ITES infrastructure development, operation and maintenance of buildings and supportive infrastructure projects, over an area of 12.74 acres, in accordance with the co-developer agreement entered into with the developer subject to standard terms and conditions as per SEZ Actand Rules provided that the lease period be reduced to a period not exceeding 30 years (Renewable).

(v) Request of M/s. Volupia Developers Pvt. Ltd. for co-developer in Multi Services SEZ at Ratanpur, District Gandhinagar, Gujarat, being developed by M/s. GIFT SEZ Ltd.

After deliberations, the Board approved the proposal of M/s. Volupia Developers Pvt. Ltd. as co-developer to develop, maintain and operate office building for units to undertake export of services in the processing area, over a built up area of 2,50,000 sq.ft., in accordance with the co-developer agreement entered into with the developer subject to standard terms and conditions as per SEZ Actand Rules provided that the lease period be reduced to a period not exceeding 30 years (Renewable).

(vi) Request of M/s. Mundra Solar Technopark Pvt. Ltd. for co-developer in the multi product SEZ at Mundra, Kutch, Gujarat, being developed by M/s. Adani Ports and Special Economic Zone Ltd.

After deliberations, the Board approved the proposal of M/s. Mundra Solar Technopark Pvt. Ltd. as co-developer to develop, operate and maintain Electronics Manufacturing Cluster (EMC) and related infrastructure facilities & services for electronic products including solar energy equipments, its ancillaries etc, over an area of 207.20 hectares, in accordance with the co-developer agreement entered into with the developer subject to standard terms and conditions as per SEZ Act and Rulesand also subject to the project being approved by the DeitY.

(vii) Request of M/s. Wipro Limited for co-developer in the sector specific SEZ for IT/ITES at Thenmelpakkam village, Chengalpattu, Kancheepuram District, Tamil Nadu, being developed by M/s. Mahindra World City Developers Limited

After deliberations, the Board approved the proposal of M/s. Wipro Limited as codeveloper for site development, boundary wall, roads, installation of water supply & sanitation & sewage system, power distribution system, Telecom facilities, air-conditioning system, warehouse, welfare centre including first aid centre and crèche & employee business stay facilities, cafeteria, fuel storage, software development/office bldg. and other activity as may be required in processing area, over an area of 90.19 acres (36.50 hectares), in accordance with the co-developer agreement entered into with the developer subject to standard terms and conditions as per SEZ Act and Rules provided that the lease period be reduced to a period not exceeding 30 years (Renewable).

(viii) Request of M/s. Wipro Limited for co-developer in the sector specific SEZ for IT/ITES at Coimbatore, Tamil Nadu, being developed by M/s. Electronics Corporation of Tamil Nadu Limited (ELCOT)

After deliberations, the Board approved the proposal of M/s. Wipro Limited as codeveloper for site development, boundary wall, roads, installation of water supply & sanitation & sewage system, power distribution system, Telecom facilities, air-conditioning system, warehouse, welfare centre including first aid centre and crèche & employee business stay facilities, cafeteria, fuel storage, software development/office bldg. and other activity as may be required in processing area, over an area of 9.50 acres (3.84451 hectares), in accordance with the co-developer agreement entered into with the developer subject to standard terms and conditions as per SEZ Act and Rules provided that the lease period be reduced to a period not exceeding 30 years (Renewable).

Item No. 65.5 : Proposals for setting up of SEZs

(i) Proposal of M/s. Infosys Limited, for setting up of a sector specific SEZ for IT/ITES at Gokul Village, within the limits of Hobli, Hubli Taluk, District Dharward, Near Airport Hubli, Karnataka, over an area of 17.422 hectares.

The Board noted that the Developer is in possession of the land. The Government of Karnataka has also recommended the proposal vide their letter dated 15.09.2014. Accordingly, the Board decided to grant formal approval to the proposal of M/s. Infosys Limited, for setting up of a sector specific Special Economic Zone for IT/ITES at Gokul Village, within the limits of Hobli, Hubli Taluk, District Dharward, Near Airport Hubli, Karnataka, over an area of 17.422 hectares.

(ii) Proposal of M/s. Mantri Developers Private Limited, for setting up of a sector specific SEZ for Electronic Hardware and Software including IT/ITES at Nanakramguda village, Gachibowli, Serilingampally Mandal, Ranga Reddy District, Telangana, over an area of 1.0504 hectares.

The Board noted that the Developer is in possession of the land. The Government of Telangana has conveyed its in-principle approval vide their letter dated 16.05.2015. Accordingly, the Board decided to grant in-principle approval to the proposal of M/s. Mantri Developers Private Limited, for setting up of a sector specific Special Economic Zone for Electronic Hardware and Software including IT/ITES at Nanakramguda village, Gachibowli, Serilingampally Mandal, Ranga Reddy District, Telangana, over an area of 1.0504 hectares. The Board also noted that there were pre-existing buildings/structures on the land proposed for the SEZ. As such buildings were vacant in terms of SEZ Rules, not having been put to commercial use, the BOA approved the proposal subject to no duty benefits being granted to the developer for pre existing buildings/structures.

(iv) Full financial details relating to change in equity/merger, demerger, amalgamation or transfer in ownership etc. shall be furnished immediately to Member (IT), CBDT, Department of Revenue and to the jurisdictional Authority.

(v) The Assessing Officer shall have the right to examine and assess the taxability and eligibility for deduction under relevant sections of the Income Tax Act, 1961.

(vi) The applicant shall comply with relevant State Government laws, including those relating to lease of land, as applicable.

(vii) The developer shall furnish details of PAN and jurisdictional assessing officer of the developer to CBDT.

(ii) Request of M/s. Leela Soft Pvt. Limited a co-developer in the sector specific SEZ for IT/ITES at Kochi, Kerala being developed by M/s. Infopark SEZ for change of name and transfer of 100% of equity shares.

After deliberations, the Board approved the request for change of name of the codeveloper from Leela Soft Pvt. Limited to M/s. Carnival Soft Pvt. Ltd., and transfer of 100% of equity shares to M/s. Carnival India Pvt. Limited, subject to following conditions:-

(i) Seamless continuity of the SEZ activities with unaltered responsibilities and obligations for the altered co-developer entity;

(ii) Fulfillment of all eligibility criteria applicable to co-developers, including security clearances etc., by the altered co-developer entity and its constituents;

(iv) Full financial details relating to change in equity/merger, demerger, amalgamation or transfer in ownership etc. shall be furnished immediately to Member (IT), CBDT, Department of Revenue and to the jurisdictional Authority.

(v) The Assessing Officer shall have the right to examine and assess the taxability and eligibility for deduction under relevant sections of the Income Tax Act, 1961.

(vi) The applicant shall comply with relevant State Government laws, including those relating to lease of land, as applicable.

(vii) The co-developer shall furnish details of PAN and jurisdictional assessing officer of the co-developer to CBDT.

The BOA, after deliberations, decided to defer the request of the Co-developer till the new power guidelines are finalized.

(iv) Proposal of M/s. MPAKVN (Indore) Ltd. developer in the multi product SEZ at Indore, Madhya Pradesh for approval of authorized operation in the non-processing area of the SEZ

After deliberations, the Board approved the proposal of the developer for the following authorized operations in the non-processing area of the SEZ subject to the condition that the authorized operation shall be available for use of the SEZ only.

S. No.

Authorized Operations

No. of Units

Area per unit (insqm.) as per

FSI / FAR

norms as applicable

Total area (in sqm.)/ capacity(in MW)

1.

Restaurant

1

NA

240.18 sqm.

2.

Shops

1

NA

159.30 sqm./8 Nos

3.

Dormitory

1

NA

281.26 sqm./20 beds

4.

Sulabh Complex (Public Toilet Facility)

1

NA

73.60 sqm.

The Board also directed that it may be examined that henceforth the power to take decisions on such matters may be delegated to the Department of Commerce.

After deliberations, the Board approved the proposal for two temporary additional access gates during construction activities.

(vi) Request of M/s. La Spirit Liquor Trading Company, KASEZ for extension of LoP and conversion of the authorized trading activity from all sorts of liquor to warehousing for worn and used clothe/waste plastic etc.

After deliberations, the BOA approved the extension of LOA upto 19th May, 2016 and deferred the request of the Unit for conversion of the authorized trading activity from all sorts of Liquor to ‘Warehousing for Worn and Used Clothes/Waste Plastic etc.

(vii) Request of M/s. Sarthak Warehousing & Trading Co., KASEZ to cut the material into wipers which left over during the process of their service activity.

The unit has sought permission to carry out manufacturing process on behalf of overseas client i.e. to cut the material into wipers which are left over during the process of their service activity, which is not permitted under Rule 18 (4) (c) of SEZ Rules, 2006. After deliberations, the BOA decided to reject the proposal.

The BOA directed the Department to examine the policy of permitting units for manufacture of Gutkha, Scented Khaini, Flavoured Chewing Tobacco & Pan Masala etc, in consultation with DIPP and till such time deferred the proposal.

The Board after deliberations decided to revoke its earlier decision taken in 63rd BOA held on 18th September, 2014 for cancellation of co-developer status of M/s. IWKPDPL and restored the co-developer approval granted to M/s. Integrated Warehousing Kandla Project Development Pvt. Ltd. (IWKPDPL), co-developer for FTWZ at Kandla.

(x) Proposal of M/s. Tidel Park Coimbatore Ltd. a co-developer in the sector specific SEZ for IT/ITES at Vilankurichi, Coimbatore, Tamil Nadu, being developed by M/s. ELCOT SEZ for approval of authorized operation in the processing area of the SEZ

The Board after deliberations deferred the proposal of the co-developer for approval of authorized operations in the processing area of the ELCOT SEZ.

(xi) Request of M/s. Dr. Fresh SEZ Phase I Private Limited, a co-developer in the sector specific SEZ for IT/ITES at village Ghamroj, Tehsil Sohna, District Gurgaon, Haryana being developed by M/s. Dr. Fresh Health Care Pvt. Ltd. for increase in area

The Board, after deliberations, approved the request of M/s. Dr. Fresh SEZ Phase I Private Limited, a co-developer in the sector specific SEZ for IT/ITES at village Ghamroj, Tehsil Sohna, District Gurgaon, Haryana being developed by M/s. Dr. Fresh Health Care Pvt. Ltd. for addition of 0.634 hectares land thereby making the total area of the SEZ to 1.794 hectares in the processing area of SEZ, subject to the contiguity of the land in the SEZ being maintained.

The Board approved the request of M/s. Ranbaxy Laboratories Ltd. for change of name & transfer of assets & liabilities to M/s. Sun Pharmaceutical Industries Ltd. pursuant to amalgamation of M/s. Ranbaxy Laboratories Ltd. with M/s. Sun Pharmaceutical Industries Ltd., consequent upon amalgamation order issued by High Court of Punjab and Haryana on 09.03.2015 and High Court of Gujarat on 14.11.2014 subject to:-

(i) Seamless continuity of the SEZ activities with unaltered responsibilities and obligations for the altered developer entity;

(ii) Fulfillment of all eligibility criteria applicable to developers, including security clearances etc., by the altered developer entity and its constituents;

(iv) Full financial details relating to change in equity/merger, demerger, amalgamation or transfer in ownership etc. shall be furnished immediately to Member (IT), CBDT, Department of Revenue and to the jurisdictional Authority.

(v) The Assessing Officer shall have the right to examine and assess the taxability and eligibility for deduction under relevant sections of the Income Tax Act, 1961.

(vi) The applicant shall comply with relevant State Government laws, including those relating to lease of land, as applicable.

(vii) The developer shall furnish details of PAN and jurisdictional assessing officer of the developer to CBDT.

(xiii) Renewal of LoP for next 5 years in respect of M/s. Plastic Processors & Exporters Private Limited, a unit in NSEZ

(iv) Full financial details relating to change in equity/merger, demerger, amalgamation or transfer in ownership etc. shall be furnished immediately to Member (IT), CBDT, Department of Revenue and to the jurisdictional Authority.

(v) The Assessing Officer shall have the right to examine and assess the taxability and eligibility for deduction under relevant sections of the Income Tax Act, 1961.

(vi) The applicant shall comply with relevant State Government laws, including those relating to lease of land, as applicable.

(vii) The developer shall furnish details of PAN and jurisdictional assessing officer of the developer to CBDT.

(xv) Request of M/s. Sunny Vista Realtors Pvt. Ltd. developer of sector specific SEZ for multi services at Panvel, Maharashtra for change of ownership to M/s. Persipina Developers Pvt. Ltd. (PDPL) and permission for Dual Use Residential Building in Nonprocessing area of SEZ

BOA, after deliberation approved the request of M/s. Sunny Vista Realtors Pvt. Ltd for change of ownership to M/s. Persipina Developers Pvt. Ltd. as developer of SEZ, subject to following conditions:-

(i) Seamless continuity of the SEZ activities with unaltered responsibilities and obligations for the altered developer entity;

(ii) Fulfillment of all eligibility criteria applicable to developers, including security clearances etc., by the altered developer entity and its constituents;

(iv) Full financial details relating to change in equity/merger, demerger, amalgamation or transfer in ownership etc. shall be furnished immediately to Member (IT), CBDT, Department of Revenue and to the jurisdictional Authority.

(v) The Assessing Officer shall have the right to examine and assess the taxability and eligibility for deduction under relevant sections of the Income Tax Act, 1961.

(vi) The applicant shall comply with relevant State Government laws, including those relating to lease of land, as applicable.

(vii) The developer shall furnish details of PAN and jurisdictional assessing officer of the developer to CBDT.

The BOA did not approve the proposal for grant tof permission for dual use of infrastructure and directed the Developer to denotify the total area of 1077419 sq.ft. (100094 sqm.) in the Non-processing area where 1012 residential units have been built from the said SEZ, subject to payment of duty benefits availed after obtaining NOC from the State Government.

The Board after deliberations approved the request of M/s. Virtusa India Pvt. Limited for merger of their company into M/s. Virtusa Consulting Services Pvt. Ltd. consequent upon their merger, subject to following conditions:-

(i) Seamless continuity of the SEZ activities with unaltered responsibilities and obligations for the altered co-developer entity;

(ii) Fulfillment of all eligibility criteria applicable to co-developers, including security clearances etc., by the altered co-developer entity and its constituents;

(iv) Full financial details relating to change in equity/merger, demerger, amalgamation or transfer in ownership etc. shall be furnished immediately to Member (IT), CBDT, Department of Revenue and to the jurisdictional Authority.

(v) The Assessing Officer shall have the right to examine and assess the taxability and eligibility for deduction under relevant sections of the Income Tax Act, 1961.

(vi) The applicant shall comply with relevant State Government laws, including those relating to lease of land, as applicable.

(vii) The co-developer shall furnish details of PAN and jurisdictional assessing officer of the co-developer to CBDT.

(xvii) Proposal of M/s Senpet (India) Ltd., an EOU under Falta SEZ for Denotification of SEZ land on which the EOU is located and swapping of private land with SEZ land.

The matter was deliberated and the Board after deliberations did not approve the proposal of M/s Senpet (India) Ltd. It further directed the Department of Commerce to pass a speaking order in the matter.

Item No. 65.7 : Request for partial de-notification

(i) Request for de-notification of 2nd phase of SEZ for Apparel Sector at Ahmedabad over an area of 17.62 Hectares out of Notified area of 38.04 Hectares –Amendment of Rules

After deliberation, the Board decided to defer the proposal as the matter was under consideration of the Department of Commerce.

Item No. 65.8 : Cancellation of Formal Approvals

The Board examined the 22 cases of the agenda for cancellation of formal approval /notification. The Board noted that the progress made by the developer is not satisfactory.

The Board, after deliberations, decided to cancel the formal approval/notification, as the case may be, in the following 22 cases. The approval is subject to the DC furnishing a certificate in the prescribed format certifying that the developer has not availed any tax/duty benefits including Service Tax Exemptions, if any, under SEZ Act/Rules, or has refunded any such benefits availed by it:-

(i) Appeal of M/s. Usha Global Corporation, a unit in Noida SEZ against order dated 17th October, 2014 of the UAC.

The Board heard the petitioner but found no merit in the contentions made by the appellant and rejected the appeal.

(ii) Appeal of M/s. Gujeswori Apparels, a unit in Noida SEZ against order dated 25thNovember, 2014 of the UAC

The Board heard the petitioner and after deliberations, decided to remand the case back to DC NSEZ to reconsider his recommendation and after giving the opportunity to the appellant for personal hearing, pass a speaking order after examining all relevant facts of the case and the applicable Rule position.

(iii) Appeal of M/s. Backbay Clothing, a unit in Noida Special Economic Zone, U.P against order dated 22nd August, 2014 of UAC.

The Board heard the petitioner and after deliberations, decided to remand the case back to DC NSEZ to reconsider his recommendation and after giving the opportunity to the appellant for personal hearing, pass a speaking order after examining all relevant facts of the case and the applicable Rule position.

(iv) Appeal of M/s. Asian Latex Limited, a unit in Noida Special Economic Zone, U.P against order dated 25th November, 2014 of UAC.

The Board heard the petitioner however it found no merit in the contentions made by the appellant and rejected the appeal.

(v) Appeal of M/s. Sona Overseas, a unit in NSEZ against order dated 25th November, 2014 of the UAC.

Since no representative from the appellant appeared for personal hearing, the Board decided to give another opportunity to the appellant.

(vi) Appeal of M/s. RGN Global Enterprises a unit in Jaipur SEZ against order dated 31st March, 2015 of the UAC, Jaipur SEZ.

The Board noted that the unit had requested to withdraw the appeal. Accordingly, the Board allowed the appeal to be withdrawn.

(vii) Appeal of M/s. Indo Widecom International Ltd., a unit in NSEZ against order dated 17th October, 2014 of the UAC

Since no representative from the appellant appeared for personal hearing, the Board decided to give another opportunity to the appellant.

Both the above mentioned petitioners had submitted their proposals for setting up of units in the Kandla SEZ to carry on (a) Import of scrap material to the warehouse; (b) Segregation of material by labours; (c) Unbundling of scrap; (d) Cutting of scrap to make it usable as per customer requirement; (e) Polishing and welding; and, (f) Bundling if required by customer.

The KASEZ UAC rejected their requests and the petitioners filed an appeal before 48th meeting of the BoA held on 19.09.2011. The Board rejected the appeal as it was against the provision of Rule 18(4) (d) of the SEZ Rules, 2006. Aggrieved by the decision of BoA the petitioners filed writ petitions before the Hon’ble Court of Delhi. The Delhi High Court on 19.01.2015, gave its verdict which is reproduced below:-

“Accordingly, the impugned orders are set aside. The appellate authority is directed to accord a hearing to the petitioners. The appellate authority will send an appropriate notice in that behalf to the petitioners indicating the date, time and venue. The notice will be sent in this behalf to the petitioner no later than ten (10) days from today. A decision will be taken on the appeal of the petitioner, as expeditiously as possible, though no later than six (6) weeks from today……”

The Board heard the lawyer representing both M/s. Futuristic Trading Private Ltd. and M/s. Globus Trading Pvt. Ltd. The Board also observed that these Units’ proposed activities, inter alia include cutting of scrap as well as polishing and welding. The representative of the appellant companies also submitted written arguments in support of its contention. It was noted that the “Recycling Process” involves some or all of the steps including Sorting, Baling, Shearing, Media separation, Melting etc. The Board noted that the activities proposed to be carried out by the appellant companies amounted to recycling of waste attracting the prohibition enshrined in Rule 18(4) (d) which provides, “No proposal shall be considered for import of other used goods for recycling.” The Board thus rejected the appeal of the SEZ Units.

Decision on Supplementary Agenda

Item No. 65.10 : Requests for co-developer

(i) Request of M/s. Electronics Technology Parks-Kerala (Technopark) for codeveloper in the sector specific SEZ for IT/ITES at Mulavana Village, Kollam District, Kerala, being developed by M/s. Kerala State Information Technology Infrastructure Limited

After deliberations, the Board approved the proposal of M/s. Electronics Technology Parks-Kerala (Technopark) for construction of a total of 5 lakhs sq.ft. IT/ITES Building, power/water, road and other infrastructure for the park, over an area of 01.80 hectares, in accordance with the co-developer agreement entered into with the developer subject to standard terms and conditions as per SEZ Actand Rules provided that the lease period be reduced to a period not exceeding 30 years (Renewable).

Item No. 65.11 : Cases for ratification by the BoA

(i) Request of M/s. Lupin Ltd., a unit in MIHAN SEZ, for extension of Letter of Permission (LoP) beyond 22nd April 2015

The Board after deliberations ratified the proposal for extension of validity period of LoP up to 22nd April, 2016.

The meeting ended with a vote of thanks to the Chair.

Annexure – 1

List of Participants for the Meeting of the Board of Approval for Special Economic Zones held on 19th May, 2015 under the Chairmanship of Commerce Secretary, Department of Commerce

No. D.O.F.No.334/5/2015-TRU Dated: 19-5-2015

The increase in Service Tax rate will come into effect from 1st June, 2015. – Except (i) services provided by the Government or local authority to a business entity and (ii) Swachh Bharat Cess – Date in respect of these two shall be notified later. – Dated 19-5-2015 – Service Tax

Government of India
Ministry of Finance
Department of Revenue
Tax Research Unit

The Finance Bill, 2015, has received the assent of the Honorable President and has been notified. In the Budget, 2015, certain amendments in the Finance Act, 1994 have been incorporated through theFinance Act, 2015, which will come into effect from a date to be notified. In this regard, 1st June, 2015 is being notified as the date on which the provisions as specified in paragraph 2 below will come into effect. Certain provisions in some notifications already issued, will also come into effect from 1st June, 2015.

2. Following provisions will come into effect from 1st June, 2015.

2.1 Section 66B of the Finance Act, 1994, prescribes the service tax rate. It has been amended bySection 108 of the Finance Act, 2015. The rate of Service Tax is being increased from 12% to 14% (including cesses). The increase in Service Tax rate will come into effect from 1st June, 2015.(Notification No.14/2015-Service Tax, dated 19th May, 2015 refers)

2.2 Sections 153 and 159 of the Finance Act, 2015 provide that section 95 of the Finance (No.2) Act, 2004 and section 140 of the Finance Act, 2007, levying Education Cess and Secondary and Higher Education Cess, respectively, on taxable services, shall cease to have effect from a date to be notified by the Central Government. The above provisions levying Education Cess and Secondary and Higher Education Cess should also cease to have effect from 1st June, 2015. (Notification No.14/2015-Service Tax, dated 19th May, 2015 refers), that is the date with effect from which the increase in the Service Tax rate comes into effect.

2.3 The Negative List entry [section 66D (j)] that covers “admission to entertainment event or access to amusement facility” is to be omitted vide section 109 (4) of The Finance Act, 2015. Section 65B (9)and 65B (24) of the Finance Act, 1994 defines amusement facility and entertainment event, respectively. These entries in the definitions have been omitted by the Section 107 (a) and (c) of theFinance Act, 2015. These changes will come into effect from 1st June, 2015. The implication of these changes are as follows,-

(a) Service Tax shall be levied on the service provided by way of access to amusement facility providing fun or recreation by means of rides, gaming devices or bowling alleys in amusement parks, amusement arcades, water parks and theme parks.

(b) Service tax shall be levied on service by way of admission to entertainment event of concerts, pageants, musical performances concerts, award functions and sporting events other than the recognized sporting event, if the amount charged is more than ₹ 500 per person for the right to admission to such an event.

2.3.1 However, the existing exemption, by way of the Negative List entry, to service by way of admission to entertainment event, namely, exhibition of cinematographic film, circus, recognized sporting event, dance, theatrical performance including drama and ballet shall be continued, through the route of exemption. Entry 47 and definition of “recognised sporting event” [paragraph 2 entry ‘zab’] has been inserted in notification No. 25/2012-ST vide S.No.1.(xii) and S. No. 2.(b) respectively of notification No. 06/2015-ST dated 1st March, 2015. This entry will also come into effect from 1st June, 2015. (Notification No.16/2015-Service Tax, dated 19th May, 2015)

2.4 The entry in the Negative List [section 66D (f)] that covers service by way of any process amounting to manufacture or production of goods has been amended vide section 109(2) of Finance Act, 2015, to exclude any service by way of carrying out any processes for production or manufacture of alcoholic liquor for human consumption. Consequently, Service Tax shall be levied on contract manufacturing/job work for production of potable liquor for a consideration. In this context, the definition of the term “process amounting to manufacture or production of goods” [section 65 B (40)] has also been amended vide section 107 (f) of the Finance Act, 2015. This levy would come into effect from 1st June, 2015. (Notification No.14/2015-Service Tax, dated 19th May, 2015 refers)

2.5 An entry in the Negative list covers betting, gambling or lottery [Section 66D (i)]. This entry has been amended by section 109 (3) of the Finance Act, 2015 so as to include an explanation that “betting, gambling or lottery” shall not include the activity carried out by a lottery distributor or selling agent in relation to promotion, marketing, organising, selling of lottery or facilitating in organising lottery of any kind, in any other manner. The objective of making these exclusions was to make it explicitly clear that while lottery per se is not subject to service tax, aforesaid services in relation to lottery will be taxable. This will come into effect from 1st June, 2015. (Notification No.14/2015-Service Tax, dated 19th May, 2015 refers)

2.6 In respect of certain services like money changing service, service provided by air travel agent, insurance service and service provided by lottery distributor and selling agent, the service provider has been allowed to pay service tax at an alternative rate subject to the conditions as prescribed under rules 6(7), 6(7A), 6(7B) and 6(7C) of the Service Tax Rules, 1994. Consequent to the upward revision in Service Tax rate, the said alternative rates shall also be revised proportionately.

2.6.1 Amendments to this effect have been made in the Service Tax Rules which will also come into effect from 1st June, 2015, that is the date with effect from which the increase in the Service Tax rate is made effective. [Notification No. 05/2015-ST 1st March 2015 Entry at Sl. No. 2(a)(e)(ii)] (Notification No.15/2015-Service Tax, dated 19th May, 2015 refers)

3. Presently, services provided by Government or a local authority, excluding certain services specified under clause (a) of section 66D, are covered in the Negative List. An enabling provision has been made, by amending section 66D (a) (iv), to exclude all services provided by the Government or local authority to a business entity from the Negative List [section 109(1) of Finance Act, 2015]. Consequently, the definition of “support service” [section 65 B (49)] is also to be omitted from date to be notified [section 107(h) of Finance Act, 2015]. As and when this amendment is given effect to, all services provided by the Government or local authority to a business entity, except the services that are specifically exempted, or covered by any another entry in the Negative List, shall be liable to service tax. The date from which this amendment would come into effect will be notified in due course.

4. An enabling provision has been incorporated in the Finance Act, 2015 vide section 117 (Chapter VI) to impose a Swachh Bharat Cess on all or any of the taxable services at a rate of 2% or lower on the value of such taxable services. This cess shall be levied on such services at such rate from such date as may be notified by the Central Government. The date from which this amendment would come into effect will be notified in due course.

5. In other words, date of effect of the provisions discussed in para 3 & 4 above are not being notified at present.

6. Amendments have been made by Sections 113, 114 and 115 in the Finance Act, 1994, in order to impart greater clarity and align the service tax provisions with those in Central Excise by adding provisions relating to closure of proceedings in sections 76, 78 and 78B. A similar alignment with the central excise provisions has been done in sections 76(2) and 78(2) with respect to cases where the appellate authority increases the duty or penalty. These changes have come into effect immediately after enactment of Finance Bill, 2015.

7. All the above changes may be brought to the notice of trade and industry and wide publicity may be made in this regard.

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(DEPARTMENT OF REVENUE)
CENTRAL BOARD OF EXCISE & CUSTOMS

NOTIFICATION No 15/2015-Central Excise (N.T.)

New Delhi, the 19th May 2015

G.S.R. (E). - In exercise of the powers conferred by rule 5B of the CENVAT Credit Rules, 2004, the Central Board of Excise and Customs hereby makes the following amendments in the notification No. 12/2014-C.E (N.T.), dated 3rd March, 2014, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 139 (E), dated the 3rd March, 2014, except as thing done or omitted to be done with respect to supply of manpower for any purpose or security services upto and including 31st March, 2015, namely:-

Govt mulls linking DBT schemes to one account : 19-05-2015

Transferring all subsidies into single account could reduce subsidy leakage.

In a bid to plug subsidy leakage, the finance ministry is planning to link all Direct Benefits Transfer (DBT) schemes into one account.

According to sources, the Department of Economic Affairs has written to the Department of Financial Services seeking comments on ways to prevent subsidy leakage.

“Allowing all the subsidies an individual is entitled to should be transferred to only one account, as against multiple accounts that are linked to different schemes; this would reduce leakage of subsidy leakage,” said a senior official.

Leakages refer to the subsidised goods that do not reach the intended beneficiary. Leakages not only have the direct costs of wastage, but also the opportunity cost of how the government could otherwise have deployed its fiscal resources.

This move is part of the JAM (Jan Dhan, Aadhaar and Mobile) trinity, which was proposed in the economic survey for FY16 to prevent subsidy leakage. “If the JAM Number Trinity can be seamlessly linked, and all subsidies rolled into one or a few monthly transfers, real progress in terms of direct income support to the poor may finally be possible,” stated the Economic Survey for 2015-16.

The finance ministry believes that transferring all subsidies in one account will reduce the monthly transfer of subsidies substantially in some cases to as low as one monthly transfer. “Our endeavour is to reduce any duplicity while transferring direct benefits to consumers and we are mulling on ways to reduce that. One such step is to transfer all the subsidies in one bank account. However, we want more accounts to be Aadhaar-seeded,” said another ministry official.

As of December 2014, about 720 million citizens had been allocated an Aadhaar card. These enrolments are increasing at 20 million a month. The government had seeded about 100 million bank accounts with registered Aadhaaar numbers by December 2014. The government currently transfers cooking gas subsidy to nearly 100 million consumers directly to their banks accounts.

Of the 120 million accounts opened under the Pradhan Mantri Jan Dhan Yojana, 40 per cent are linked to Aadhaar and according to officials, more accounts are being linked. Nearly 36 DBT schemes are linked to bank accounts and subsidy is directly transferred in these

According to the survey, 41 per cent of the subsidies transferred through kerosene sold in ration shops were lost due to leakage. The fiscal cost of excess transfer of subsidy on kerosene led to a loss of Rs 10,044 crore for 2011-12. “Value of the fiscal savings – due to lower leakages is eight times greater than the cost of implementing the programme,” stated the survey.

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(DEPARTMENT OF REVENUE)
CENTRAL BOARD OF EXCISE & CUSTOMS
NOTIFICATION No 14/2015-Central Excise (N.T.),

New Delhi, the 19th May 2015

G.S.R. (E). - In exercise of the powers conferred by section 37 of the Central Excise Act, 1944 (1 of 1944) and section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules further to amend the CENVAT Credit Rules, 2004, namely :-

1. (1) These rules may be called the CENVAT Credit (Third Amendment) Rules, 2015.

(2) They shall come into force with effect from 1st of June, 2015.

2. In the CENVAT Credit Rules, 2004, in rule 6, in sub-rule (3), -

(a) in clause (i), after the words “goods and”, the words “seven per cent. of value of the” shall be inserted.

(b) in the second proviso, for the word “six”, the word “seven” shall be substituted.

Notification No. : 17/2015 Dated: 19-5-2015

Exempts taxable services provided under the Power System Development Fund Scheme of the Ministry of Power – 17/2015 – Dated 19-5-2015 – Service Tax

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY,

PART II SECTION 3, SUB-SECTION (i)]

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(DEPARTMENT OF REVENUE)

NOTIFICATION No 17/2015-ST

New Delhi, the 19th May 2015

G.S.R. (E). - In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts taxable services provided under the Power System Development Fund Scheme of the Ministry of Power (hereinafter referred to as the Scheme), from the whole of the service tax leviable thereon under section 66B of the said Act:-
by way of,-

(B) transportation of the incremental Re-gasified Liquefied Natural Gas (RLNG) (e-bid RLNG) to the power generating companies or plants as specified in the Annexure-I and Annexure -II to this notification,

subject to the following conditions, namely:-

(a) GAIL is appointed as the ‘e-bid RLNG Operator’ for the gas based plants outside Gujarat and Gujarat State Petroleum Corporation Limited (GSPCL) will be ‘e-bid RLNG Operator’ for the gas based plants within Gujarat and GAIL will be the only agency for the procurement of e-bid RLNG under the Scheme;

(b) supply of imported spot RLNG ‘e-bid RLNG’ to the Stranded gas based plants as well as the plants receiving domestic gas, will be upto the target Plant Load Factor (PLF) selected through a reverse e-bidding;

(c) the eligible gas based power plants under the Scheme shall be the Stranded gas based power plants and those plants receiving domestic gas whose actual average PLF achieved during April-January 2014-15 was below the target PLF;

(d) in case of plants receiving domestic gas (Annexure-II), Power System Development Fund Scheme (PSDF) support being made available only for incremental generation of electricity during the relevant period over and above the PLF achieved during April- January 2014-15, for example, if the PLF actually achieved during April-January 2014-15 is 20%, and if during the relevant period the PLF is 25% from all sources including that from e-bid RLNG, then PSDF support will be made available for the electricity corresponding to 25- 20 = 5% PLF, but limited to the actual generation from e-bid RLNG during that relevant period;

(e) the person liable to pay service tax produces the following certificates as verified by the Empowered Pool Management Committee (EPMC) constituted by Ministry of Power vide Office Memorandum No. 4/2/2015-Th-1 dated 27th March, 2015, within a period of three months, or such extended period not exceeding a further period of six months as the Assistant Commissioner or Deputy Commissioner of Central Excise or Service Tax, may allow, before the jurisdictional Central Excise officer:-

(i) certification by Central Electricity Authority (CEA) for each participating gas based plant regarding the quantum of electricity to be generated per unit of gas based on the technical parameters of that plant;

(iii) self-certification by the participating gas based plant regarding the quantity of e-bid RLNG gas actually utilised during the relevant period for generation of electricity, and Discom-wise supply of such electricity; and

(iv) certification by participating Discoms regarding the quantum of e-bid RLNG based electricity purchased during the relevant period from participating gas based plants;

(f) the person, failing to produce the aforesaid certificates before Central Excise Officer within the stipulated period, would pay the duty leviable on such services along with the applicable interest thereon;

Provided that the exemption shall not be available if such Re-gasified Liquefied Natural Gas (RLNG) and Liquefied Natural Gas (LNG), is used for generation of electrical energy by captive generating plant as defined in clause (8) of section 2 of the Electricity Act, 2003 (36 of 2003):
Provided further that nothing contained in this notification shall apply on or after the 1st day of April, 2017.

Notification No. : 16/2015 Dated: 19-5-2015

Amendment in the Mega Exemption Notification relating to (i) Job work (alcoholic liquors for human consumption) and (ii) Services by way of right to admission shall be effective from 1-6-2015 – 16/2015 – Dated 19-5-2015 – Service Tax

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY,

PART II SECTION 3, SUB-SECTION (i)]

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(DEPARTMENT OF REVENUE)

NOTIFICATION No 16/2015-ST

New Delhi, the 19th May 2015

G.S.R. (E). - In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby appoints the 1st day of June, 2015 as the date on which the provisions of sub-paragraphs (ix) and (xii) of paragraph 1 and sub-paragraph (b) of paragraph 2 of the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 06/2015 – Service Tax, dated the 1st March, 2015, published in the Gazette of India, Extraordinary, vide number G.S.R. 160(E), dated the 1st March, 2015 shall come into force.

G.S.R. (E). - In exercise of the powers conferred by sub-section (1) read with sub-section (2) of section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby appoints the 1st day of June, 2015 as the date on which the provisions of sub-clauses (a), (b) and (c) and item (A) of sub-clause (d) of clause (ii) of sub-paragraph (e) of paragraph 2 of the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 05/2015 – Service Tax, dated 1st March, 2015, published in the gazette of India, Extraordinary, vide number G.S.R. 159(E), dated 1st March, 2015 shall come into force.

[F. No.334/5/2015 -TRU]

(Akshay Joshi)
Under Secretary to the Government of India

Notification No. : 14/2015 Dated: 19-5-2015

Increased rate of service tax from 12.36 to 14 shall be effective from 1-6-2015 – Date in respect of (i) services provided by the Government or local authority to a business entity and (ii) Swachh Bharat Cess shall be notified later – Prescribes effective date as 1-6-2015 on which the provisions of clauses (a), (c) and (f) of section 107, section 108, sub-sections (2), (3) and (4) of section 109, section 153 and section 159 of the Finance Act, 2015 shall come into force. – 14/2015 – Dated 19-5-2015 – Service Tax

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY,

PART II SECTION 3, SUB-SECTION (i)]

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(DEPARTMENT OF REVENUE)

NOTIFICATION No 14/2015-ST

New Delhi, the 19th May 2015

G.S.R. (E). - In exercise of the powers conferred by clauses (a), (c) and (f) of section 107, section 108, sub-sections A (2), (3) and (4) of section 109, section 153 and section 159 of the Finance Act, 2015 (No. 20 of 2015), the Central Government hereby appoints the 1st day of June, 2015 as the date on which the provisions of clauses (a), (c) and (f) of section 107, section 108, sub-sections (2), (3) and (4) of section 109, section 153 and section 159 of the said Act shall come into force.

G.S.R. (E). - In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No.26/2012-Service Tax, dated the 20th June, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 468 (E), dated the 20th June, 2012, namely:-

In the said notification, in the paragraph 2 relating to definitions, clause ‘a’ shall be omitted.

The Shah Committee, constituted to go into levy of minimum alternate tax (MAT) on FIIs (foreign institutional investors), will look into all important “legacy” cases, Finance Minister Arun Jaitley said, blaming conflicting judicial rulings for the controversy on the issue that has riled foreign investors.

He also said foreign investors had invited the levy of MAT on themselves by approaching the Authority of Advance Rulings (AAR) in 2012 and since the issue is now stuck in judiciary, the government cannot provide any exemption.

“The only thing we have done is to exempt (MAT levy for the) future. The past is not of our making. You go to a Tribunal and you invite a verdict against yourself. So, if the 2012 verdict had not been invited, the 2010 verdict would have stood,” said Jaitley.

While the tax department has already sent draft notices totalling Rs 602.83 crore to 68 FIIs for previous years, Jaitley, in Budget 2015-16, exempted them from paying the levy with effect from April 1, 2015.

“There is nothing that this government has done. It is a clear legacy issue. As far as the future is concerned, I have completely put the whole issue to rest,” said Jaitley.

The AAR had, in 2010, ruled that MAT did not apply to foreign companies which did not have an office in India.

But in 2012 the AAR directed Castleton to pay MAT in India on their book profits when it transferred shares from a Mauritius entity to a Singapore entity.

Adding, “On all the important legacy issues, the Justice Shah panel, which comprises experts outside the government, can take a more dispassionate view. If you have only views coming from the revenue department they are too revenue- centric.”

“If you have it coming from the chambers they are too assessee-friendly. So let there be a panel outside which advise the government as to what the correct position appears to be,” Jaitley said.

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(DEPARTMENT OF REVENUE)
CENTRAL BOARD OF EXCISE & CUSTOMS
NOTIFICATION No 14/2015-Central Excise (N.T.),

New Delhi, the 19th May 2015

G.S.R. (E). - In exercise of the powers conferred by section 37 of the Central Excise Act, 1944 (1 of 1944) and section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules further to amend the CENVAT Credit Rules, 2004, namely :-

1. (1) These rules may be called the CENVAT Credit (Third Amendment) Rules, 2015.

(2) They shall come into force with effect from 1st of June, 2015.

2. In the CENVAT Credit Rules, 2004, in rule 6, in sub-rule (3), -

(a) in clause (i), after the words “goods and”, the words “seven per cent. of value of the” shall be inserted.

(b) in the second proviso, for the word “six”, the word “seven” shall be substituted.

Rupee gains momentum, up 4 paise against dollar : 18-05-2015

The rupee appreciated by another 4 paise to 63.47 against the US dollar in the early trade today, extending its winning streak for the fourth day on continued selling of the American currency by exporters.

Forex dealers said that apart from sustained selling of the American currency by exporters, dollar’s weakness against other currencies overseas backed up the rupee at the Interbank Foreign Exchange.

Furthermore, a higher opening in the domestic equity markets put the rupee on a strong footing.

The local currency had gained 14 paise to close at 63.51 on Friday.

Meanwhile, the benchmark BSE Sensex rose 126.47 points, or 0.460%, to 27,450.47 in early trade.

Source : PTI

Fiscal deficit was 4% of GDP in FY15, says FinMin : 18-05-2015

The central government’s fiscal deficit for 2014-15 was four per cent of gross domestic product (GDP), according to provisional figures released by the finance ministry on Sunday.

The revised estimate presented in late February had put it at 4.1 per cent. The Centre had to resort to more cuts in plan expenditure to rein in fiscal deficit. The revenue deficit would be 2.8 per cent of GDP in 2014-15, against the revised estimate (RE) and earlier Budget estimate of 2.9 per cent.

Final data on the central government accounts for 2014-15 would be issued by this month-end, which would modify the RE for the year, issued at end-February when this year’s Budget was presented. The finance ministry on Sunday issued its provisional estimates of these RE revisions. These are based on the anticipated adjustments from various ministries and revenue figures of the year.

The controller general of accounts will give the final figures of the fiscal accounts and there would be a slight change in those, compared to what was given on Sunday.

According to these latter figures, the Centre’s fiscal deficit finally would be Rs 501,880 crore, about 98 per cent of the Rs 512,628 crore RE for 2014-15. The revenue deficit would be Rs 358,306 crore, about 99 per cent of the Rs 362,486 crore RE for 2014-15.

“The government is firmly committed to the path of fiscal consolidation and this is a step forward,” the ministry said.

Gross tax collections at Rs 12,45,037 crore showed growth of nine per cent as compared to 2013-14. Devolution of tax collections to states at the end of 2014-15 was Rs 3,37,808 crore. This implied net collections were Rs 9,07,229 crore, slightly lower than the Rs 9,08,463 crore in the RE. Non-tax revenue was Rs 196,959 crore, about 90 per cent of the RE at Rs 217,831 crore. Non-debt capital receipts, which includes disinvestment, was Rs 43,439 crore or 103 per cent of the RE.

Plan expenditure at the end of 2014-15 was Rs 435,621 crore, around Rs 32,000 crore lower than the RE at Rs 467,934 crore. The RE was already lower than the BE by a little over Rs 1 lakh crore.

Non-plan expenditure was Rs 11,91,140 crore or 99.8 per cent of the RE at Rs 12,13,224 crore.

Source : Business Standard

No. HRD/CM/220/14/2013-14/(Pt-II)/1008 Dated: 18-5-2015

Meeting to review the progress in implementation of N.R. Parmar judgment of the Supreme Court and the decisions taken-reg. – Circular – Dated 18-5-2015 – Income Tax

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

CENTRAL BOARD OF DIRECT TAXES

DIRECTORATE OF INCOME TAX

(HUMAN RESOURCE DEVELOPMENT)

ICADR Building, Plot No. 6, Vasant Kunj Institutional Area Phase-II

New Delhi – 110070. Ph. 26130592, Fax 26130594.

HRD/CM/220/14/2013-14/(Pt-II)/1008

Dated: 18.05.2015

To,

All Pr. CCsIT(CCA)

Subject :- Meeting to review the progress in implementation of N.R. Parmar judgment of the Supreme Court and the decisions taken-reg.

Sir/Madam,

To ascertain the status of implementation of the Supreme Court judgment in N.R Parmar and the guidelines issued by CBDT in the form of FAQs, meetings chaired by DGIT (HRD) were held on 30.3.2015 and 10-04-2015, with representatives of all CCAs and ITEF. The representatives from Bihar & Jharkhand and Kerala and ITGOA were not present in the meetings. The highlights of the meeting are as below.

2. The DGIT (HRD) impressed upon the participants that the implementation task was important for finalizing the All India Seniority list of ITOs which in turn was essential for promotion from ITO to ACIT grade.

3, DGIT (HRD) sought inputs from the participants about the process being followed by them for implementation of N.R. Parmar judgment. The representatives – were unanimous in saying that the process being followed was re-fixing the seniority list followed by review DPCs starting from the lowest grade and progressing upwards. It was explained by them that this bottom-to-top approach was the more preferable method, than undertaking the fixation of seniority list of Inspectors and ITOs first and then progressing downwards, since the latter method would involve a review of the review DPCs, which would add to the confusion and would extend the period of implementation

4. M.P & Chhattisgarh and U.P (East) have already carried out the entire task of implementation of the N.R Parmar decision in all the cadres. In NER, few minor objections post review DPCs were received, which will be finalized soon.

5. Rajasthan region raised a query regarding Examination year 1992 and 1993, whether the Vacancy year and the Examination year in the above years should be treated as 1992-93 and 1993-94 respectively, contrary to the seniority fixed in the Advisory issued by the Board, as some representations had been received from the employees. The DIT (HRD)-II, clarified that decision of the Apex Court clearly states that the seniority is to be counted with respect to the date of requisition, and not the exam year.

6. In A.P & Telengana region, representations were received regarding fixation of seniority in the case of employees selected through Sports and Compassionate quota on the basis of N.R Parmar judgment. They were informed the apex court decision in N.R Parmar is applicable only for the direct recruits selected through the open examination, Sports & Compassionate quota appointments are to be dealt with as per separate instructions.

7. For UP (West) region, the representatives informed that they were not able to trace the records from 1986 to 1991 i.e. for the period, the requisition was made directly by CCIT office to the Staff Selection Commission. DGIT (HRD) advised UP (West) region to obtain the dates of requisition made by them to SSC, by looking into the dossiers of the selected candidates of those years, as the dossiers would contain details of the requisition letters. SSC regional offices or even neighboring regions may be consulted to get a clue.

8. Mumbai also Informed about lack of desired data, as the same were lost during the massive floods which ravaged Mumbai few years back. A Task Force assisted by subcommittees for various cadres has been constituted to prepare and finalize the seniority list. Mumbai proposed to complete all the review DPCs within next 5-6 months.

9. Odisha too was facing the problem of lack of documents. The files of the previous DPCs could not be traced, however, necessary steps were being taken to address the issue.

10. In the other regions, the process of implementation of the N.R Parmar judgment was at various stages like finalization of the seniority list, circulation of the seniority list, completion of review DPCs in some cadres etc. The time frame sought by the regions for completing the remaining work varied from 5-6 months as the total number of review DPCs Involve 28 years i.e DPCs held since 1986,(which is the cut off year), and involves about 120 review DPCs.

11. Measures to accelerate the entire process were also discussed. It was suggested, that the circulation of the seniority list, should be for 3-4 days against duration of week or more, being followed by various regions. This would save time. It was also emphasized that the representatives of the associations at local level should also assist in the exercise, specially at the stage of addressing and resolving of objections to the seniority list circulated, DGIT (HRD) requested the President, ITEF to sensitize ITEF representatives to cooperate with the local administration to expedite the process. President, ITEF agreed to do so.

12. Following decisions were taken in the meeting:

I) Bottom-to-top approach would be followed by all the regions in implementing the decision, which entails re-fixing the seniority list followed by review DPCs starting from the lowest grade and progressing upwards rather than undertaking the fixation of seniority list of Inspectors and ITOs first and then progressing downwards, since the latter method would involve a review of the review DPCs, which would add to the confusion and would extend the period of implementation.

II) All the regions to finish the task of implementation of the N.R Parmar Judgement by 31-07.2015 and also to send the compliance report to DGIT (HRD).

III) Directorate of HRD will monitor the progress of DPCs on regular basis with all cadre controlling authorities.

G.S.R. 388 (E).- In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) and sub-section (3) of section 3 of Additional Duties of Excise (Textile and Textile Articles) Act, 1978 (40 of 1978), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby directs that each of the notifications of the Government of India, Ministry of Finance (Department of Revenue), specified in column (2) of the Table hereto annexed shall be amended or further amended, as the case may be, in the manner specified in the corresponding entry in column (3) of the said Table, namely:-

(1) in para 2, in sub-para (2b), the following shall be added at the end, namely :-

“such transferred goods may also be returned by the second unit to the original unit in case of rejection without payment of duty after giving prior intimation to the said officer and by following the re-warehousing procedure.”;

(2) after para 2B, the following para shall be inserted namely:-

“(2C) In respect of a group of EOUs or EHTPs or STPs or as the case may be, BTP units which source inputs centrally in order to obtain bulk discount and, or, reduce cost of transportation and other logistics cost and, or, to maintain effective supply chain, inter unit transfer of goods and services may be permitted on a case-to-case basis by the Unit Approval Committee. In case inputs so sourced are imported and, then, transferred to another unit, then value of the goods so transferred shall be taken as inflow for the unit transferring these goods and as outflow for the unit receiving these goods , for the purpose of calculation of NFE.”;

(3) in para 8, in the Explanation, after clause (3), the following shall be inserted namely :-

“(4) unit which has not availed any duty benefit on procurement of raw material, capital goods, etc., may be provided fast track de-bonding or exit from the STP or EHTP scheme.”;

(4) in para 9, the following shall be added at the end, namely :-

“The said officer subject to the approval of the Commissioner of Customs or Commissioner of Central Excise, as the case may be, may also allow sharing of infrastructural facilities among EOUs in accordance with and subject to the terms and conditions specified inpara 6.12(g) of Foreign Trade Policy 2015-2020.”;

(5) after para 9, the following para shall be inserted, namely :-

“9A An EOU which intends to set up warehousing facilities outside the EOU premises and outside the jurisdiction of Development Commissioner, at a place near to the port of export, to reduce lead time for delivery of goods overseas and to address unpredictability of supply orders, is permitted to do so subject to the provisions ofnotification No. 46/2001-CE (N.T.) dated the 26th June, 2001as amended from time to time.”;

(6) in para 10A, after clause (i), the following clause shall be inserted namely :-

“(ia) the exemption contained herein shall also apply to procurement of spares or components, upto 2% of the value of manufactured articles, cleared into DTA, during the preceding year, for supply to the same consignee or buyer for the purpose of after-sale service. The same can be cleared in DTA on payment of applicable duty but such clearances shall be within the overall entitlement of the unit for DTA sale at concessional rate of duty as prescribed in Para 6.08 (a)of Foreign Trade Policy 2015-2020.”;

(7) in the Explanation occurring after paragraph 13,-

(a) for clause (iii), the following clause shall be substituted, namely:-

(b) for clause (vi), the following clause shall be substituted, namely :-

“(vi) ‘Handbook of Procedures’ means Handbook of Procedures notified by the Government of India in the Ministry of Commerce and Industry published in the Gazette of India, Extraordinary, Part-I, Section 1 vide Public Notice No. 01/2015-2020, dated the 1st April, 2015;”;

(c) for clause (x), the following clause shall be substituted, namely:-

“(x) ‘Status holder’ means importer recognised as One Star Export House, Two Star Export House, Three Star Export House, Four Star Export House or as the case may be, Five Star Export House, in terms of the Foreign Trade Policy;”;

(d) in clause (xi), for the words and figures “Para 6.5 of Foreign Trade Policy and Para 6.9.1 of Handbook of Procedure Volume 1”, the words and figures “Para 6.04 of Foreign Trade Policy and Para 6.10 of Handbook of Procedure” shall be substituted.

(b) for clause (v), the following clause shall be substituted, namely :-

“(v) ‘Handbook of Procedures’ means Handbook of Procedures notified by the Government of India in the Ministry of Commerce and Industry published in the Gazette of India, Extraordinary, Part-I, Section 1, vide Public Notice No. 01/2015-2020, dated the 1st April, 2015;”.

THIRUVANANTHAPURAM: The Narendra Modi government is not averse to reviewing any aspect of the contentious Land Bill, including bringing back the UPA-inspired consent clause, Rural Development Minister Choudhary Birender Singh told ET on Friday.

“Nothing is ruled out. Things can be sorted out only when discussed with an open mind… Any good suggestions, concerning any clause, even consent clause, if it is in the interest of the farmer, we are ready. What I mean is considering if consent should be based on number of landowners or acreage (quantum of land owned),” Singh told ET in an exclusive interview.

Land acquisition is impossible under UPA’s act: Birender Singh

Singh — a veteran Congress leader who crossed over to BJP months before the 2014 general elections that brought Narendra Modi to power — admitted that he had supported the earlier land acquisition Act brought by the UPA regime, which is now being amended by the NDA government.

Referring to the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, that had came into force on January 1, 2014 — months before UPA was voted out of power — Singh said: “I had told Sonia Gandhi about the ‘Change in Land Use’ practice in Haryana when there was a Congress CM and she agreed, but did not act against this.”

“The manner in which it was done was like dacoity,” he added. The controversial ‘Change in Land Use’ practice in Haryana had acquired political tones as it was allegedly used in land deals involving companies floated by Robert Vadra, son-in-law of Congress president Sonia Gandhi.

But Singh said his real problem with UPA’s land law was more with the “mistakes” in the original Act. “It is true that I supported the UPA law. But when I became minister, would you believe that the first time I sat with my ministry people, I found 54 clerical, grammatic and spelling mistakes? When you had to say ‘act’, you were using ‘part’, for instance,” he said.

The Modi government had taken it as a priority legislation to amend clauses of the UPA bill, especially the one seeking consent of 70-80% of those whose land is being acquired.
Almost the entire Opposition and some allies of the ruling NDA are against various provisions of the amendment bill brought by the government and the resistance has given a new lease of life to the down-and-out Congress party. The government, which has since promulgated the ordinance on the bill twice, has agree to refer it to a joint select committee to be headed by former Union minister SS Ahluwalia.

With reference to above cited subject, I am directed to refer to provision laid· down under Rule 50 ofSEZ Rules, 2006 which allows units to transfer goods to DTA or abroad for repair, replacement, testing, calibration, quality testing and research and development purposes under intimation to the Specified Officer, on maintenance of records for movement of such goods, or to any recognized laboratory or institution on giving an undertaking to the authorized officer for the return of such goods.

2. With a view to promote the ease of doing business further, it is advised that SEZ Units are now allowed to remove goods for repair, replacement, testing, calibration, quality testing and research and development purposes also on self attestation basis under intimation to the Specified Officer and on giving an undertaking to the Authorised Officer for return of such goods. A record of these will be maintained by the unit as per SEZ Rules.

Prime Minister Narendra Modi on Friday urged the Chinese leadership to adopt a fresh approach to contentious issues affecting relations between India and China so that the two sides could play a greater role on the world stage.

Modi described the India-China relationship in recent decades as “complex” but said both sides are committed to set a “new direction between the two largest Asian countries”.

Speaking alongside his Chinese counterpart Li Keqiang after the two countries signed 24 agreements, Modi said both sides had agreed to continue to explore a “fair, reasonable and mutually acceptable resolution” of their dragging border dispute. He also sought tangible progress on issues related to the visa policy and trans-border rivers.

“I am pleased to visit China in the first year of my government. This is one of our most important strategic partnerships…The re-emergence of India and China and their relationship will have a profound impact on the two countries and the course of this century,” he said.

He said he had found the Chinese leadership “responsive” to his suggestion that China take a strategic and long-term view of bilateral relations. “I stressed the need for China to reconsider its approach on some of the issues that hold us back from realising full potential of our partnership,” he added.

“On the boundary question, we agreed that we continue to explore a fair, reasonable and mutually acceptable resolution. We both reiterated our strong commitment to make all efforts to maintain peace and tranquility in the border region,” he said.

Source : The Hindu

Starting FY16 on a disinflationary note : 15-05-2015

The fall in the wholesale price index (WPI) steepened in April “dropping to -2.7 per cent from -2.3 per cent in March. This is the sixth consecutive decline in WPI inflation, signaling mounting disinflationary pressures in the economy. A major part of this has come from a decline in fuel and power inflation ” averaged at -10.6 per cent since November 2014. In April, along with fuel inflation, primary article (-0.5 per cent) and manufacturing inflation (-0.5 per cent) also turned into the negative category. However, as fuel prices start to firm up from their lows in the last quarter, fuel inflation might see a moderate uptick in the coming months.

Measures of core inflation, “the non-food manufacturing inflation was negative at -0.4 per cent and the CRISIL Core inflation Indicator (CCII) also fell to a decade low of -0.1 per cent in the month. As the economic recovery continues to remain fragile, demand side pressures remain benign on inflation as indicated by the core indicators.

Lower readings for both WPI and CPI this month, along with weak IIP data, opens up room for the RBI to reduce the policy rate further. We expect RBI to reduce the repo rate by 25bps on June 2 ” the next monetary policy meeting. An out of policy rate cut in the next few days cannot be ruled out.

Headline inflation was pulled down by falling fuel price and power prices (inflation fell to -13.0 per cent). Prices remained unchanged in coal while dropping sharply in mineral oils (-19.1 per cent). The latter was influenced by low prices of LPG (-6.1 per cent), Petrol (-18.4 per cent) and High speed diesel (-14.4 per cent). Crude oil prices have firmed up in recent months however we believe this uptick will be temporary. We expect oil prices to average at $60-65/barrel (Brent) in 2015-16 from an estimated average of $85/barrel in 2014-15.

Turning to primary articles, food inflation softened to 5.7 per cent from 6.3 per cent in March as a drop in fruits and vegetable inflation (7.4 per cent from 11.3 per cent in march) offset the pickup in food grain inflation (+80 bps). Despite this it was worrying to see that inflation in pulses shot up to 15.4% in April, signalling that the impact of unseasonal rains is filtering through. This trend was missing in the CPI data released on May 12 and is likely to raise food grain inflation in May.

Core inflation, ” an indicator of demand-side pressure on prices, ” continued its downward journey in April. Non-food manufacturing inflation remained negative at -0.4 per cent with the following items recording negative inflation ” textiles (-2.0 per cent), basic metals (-2.7 per cent), chemicals (-1.6 per cent), rubber (-1.3 per cent) and leather (-2.1 per cent). In other categories such as paper & paper products, and machinery and machine tools inflation moderated in the month.

CRISL Core inflation Indicator (CCII), ” an alternative measure of core inflation which is calculated by removing metal prices from the prices of manufactured articles” turned negative to -0.1 per cent from 0.4 per cent in March. The reason that metals are excluded from the CCII is that metal prices are mostly determined by changing global demand-supply dynamics and volatility in exchange rate rather than domestic conditions alone. In April, overall basic metals prices was negative (-2.7 per cent) with inflation in non- ferrous metals declining (0.4 per cent) while being negative for ferrous metals (-3.6 per cent). As a result, CCII and the non-food manufacturing inflation were at variance. Some of this gap was filled with falling manufactured food inflation, ” an item included in the CCII. Manufactured food inflation turned negative to -1.0 per cent from 0.6 per cent previously. This came on the back of declining sugar and tea and coffee prices. The decline in sugar prices is in line with the fall witnessed in global sugar prices in recent months.

Source : PTI

Govt to keep the option of joint Parliament session open for Land Bill: Jaitley : 15-05-2015

The govt had conceded to opposition demands to send Bill to a 30-member joint select committee day before yesterday.

Finance Minister Arun Jaitley, on Thursday, said sending the proposed amendments on the land acquisition Bill to a joint committee of Parliament was the fastest way possible for the amendments to be legislated. He added that the government would keep all options open on the contentious Bill, including a joint session of both Houses of Parliament.

The government had conceded to opposition demands to send the land Bill to a 30-member joint committee on Tuesday. The committee is expected to give its report in the first week of the monsoon session of Parliament. “The road map that we have now developed of sending it to the joint committee is probably the fastest route to get the land Bill through. Now, if there are some good suggestions that come from the joint committee they are always welcome,” said Jaitley, in an interaction with reporters in the finance ministry.

“Having conducted various dialogues with the regional and other opposition parties, I think the joint committee will be the first route possible. In that sense, it is a productive session,” he said.

When asked if the government would be open to a joint session of Parliament to push the amendments through, Jaitley said no option was being ruled out.

Apart from the land Bill, the government had also agreed to the opposition’s demand for sending the constitution amendment Bill to the Goods and Services Tax to a Rajya Sabha committee. The Bill was earlier passed by the Lok Sabha. “Even in the Lok Sabha, the principal opposition party wanted to send the Bill to a committee. That proposal would have been defeated since it requires a majority vote. Hence, as plan B, the principal opposition resorted to disrupting the proceedings,” Jaitley said.

“I would have been much happier if the Rajya Sabha also approved the (Constitution Amendment to) GST. In that sense, I would not have been cutting it to fine with regard to the April 1, 2016 deadline. I would only hope that the principal opposition party had realised the significance of this timeline at this moment.”

Jaitley added that he was confident that the select committee will give “overwhelming support” to GST and that the centre and the states will now have to work overtime to meet the deadline. “I remain very hopeful that the deadline for rollout will be met.”

Additionally, Revenue Secretary Das confirmed that the compliance window provision before the black money law comes into force will be in this financial year. “The Central Board of Direct Taxes (CBDT) is working on the timeline for compliance window. They will be getting notified in a matter of 2-3 weeks,” Das said.

The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Bill, 2015, which got the nod of the Rajya Sabha on Wednesday, two days after the Lok Sabha passed it, seeks to unearth unaccounted wealth stashed abroad.

On the apprehensions being expressed that the new black money law is tough and could create hardship for people, Jaitley said: “Those who don’t have illegal money or assets abroad have nothing to worry. Amongst those who express very very serious apprehensions, there is a give-away in that.”

Source : Business Standard

Markets take a beating on stuck GST, land bills : 14-05-2015

Wiping out more than half of its gains in the last two sessions, BSE’s benchmark Sensex plunged 630 points on Tuesday as stocks across the board tanked amid worries that key land acquisition and GST reforms would be delayed and another sell-off in global bond markets. The rupee also tumbled by 32 paise to close at 64.17 on fresh dollar demand and capital outflows.

With the market doubting the success of important reform measures, the BSE Sensex plunged below the 27,000 level and closed 2.29 per cent lower at 26,877.48 points after two days of straight gains. The 50-share NSE Nifty also slipped below the 8,200-level by plunging 198.30 points to close at 8,126.95. Investors wealth, or market capitalisation, fell by over Rs 2 lakh crore.

Tuesday’s sell-off was triggered by a stiff political opposition to the government’s ambitious reform proposals on the GST and land acquisition. The government was forced to send the Land Bill to a joint parliamentary committee, while the Bill for roll-out of long-pending Goods and Services Tax also got referred to a Select Committee in Rajya Sabha, disappointing the markets.

Volatility in the bond markets weighed on stocks across the region, adding to existing investor anxiety over the perilous state of Greece’s finances. Even as shares in Europe and Asia fell, traders have blamed the surge on a rise in inflation expectations, higher oil prices, and restricted liquidity caused by ECB purchases.

Vinod Nair, head-fundamental research, Geojit BNP Paribas, said, “the culmination of several factors led to the sharp correction. The correction was led by FIIs in spite of the government setting up a high level committee to decide the MAT issue. Factors like increase in Europe bond yield, outperformance by other emerging markets and currency depreciation have impacted global inflows. Besides, as the domestic earnings are being downgraded and outcome from parliament session is shaky — especiall on the GST and Land Bill — the market is not taking it well.”

“FIIs have remained in the sell mode since mid-April, which has been one of the key reasons for the weakness in Indian equities. Today’s weakness can also be attributed to the global cues with the Asian and European indices trading weak. Sustained depreciation in the rupee against the dollar coupled with the ongoing weak corporate earnings season have also created nervousness. Further, the not-so-encouraging management commentaries post the results have also dented the sentiments,” said Hitesh Agrawal, head research, Reliance Securities.

Source : Business Line

PM arrives in China; to hold talks with President Xi Jinping : 14-05-2015

XI’AN, MAY 14:

Prime Minister Narendra Modi today arrived here on a three-day visit to China during which he will hold summit talks with Chinese President Xi Jinping on a range of issues, including the festering border dispute and China’s plans for infrastructure projects in PoK.

Modi, who is undertaking his first visit to China as Prime Minister, would begin his day here with a visit to the famous Terracotta Warriors museum which has a large collection of terracotta sculptures depicting the armies of Qin Shi Huang, the first Emperor of China.

He would later visit the famous Buddhist Dashang temple in Shaanxi province, the home province of President Xi, who has restored its old glory by making it the headquarters of his mega Silk Road projects.

Xi will join Modi in the afternoon and the two leaders would spend nearly about five hours with restricted as well as informal talks to build on their rapport discussing the most contentious issues like border dispute and China’s big push to rope in reluctant India into the Silk Road projects, specially the Maritime Silk Road (MSR) over which India has strong reservations.

India has raised with China its concerns over huge Chinese investments in Pakistan-occupied Kashmir (PoK) following President Xi Jinping’s trip to Pakistan last month.

In Xi’an, Modi will be hosted by Xi, departing from normal protocol to reciprocate the gesture by Modi in Ahmedabad when the Chinese leader visited India in September last year.

Xi would accompany him to the famous Wild Goose Pagoda, the magnificent structure built in sixth century to commemorate the visit of a spiritual structure build to highlight the famous Chinese Buddhist monk Xuan Zang’s 17-year-long journey.

Modi would also be accorded traditional Tang dynasty welcome followed by a banquet by Xi.

The two countries are set to announce a multi-million joint film production to reconstruct Xuan’s epic journey.

After informal interaction with the Chinese President, Modi will leave for Beijing late in the evening.

He is scheduled to hold talks with Premier Li Keqiang next day and go to Shanghai where he would address a business get-together, inaugurate the first Mahatma Gandhi chair at Fudan University and address the Indian community.

He is being accompanied by National Security Advisor Ajit Doval, Foreign Secretary S Jaishankar and senior officials.

China is the first leg of Modi’s three-nation tour that will also take him to Mongolia and South Korea.

Deferred Payment Protocols dated April 30, 1981 and December 23, 1985 between Government of India and erstwhile USSR

Attention of Authorised Dealer Category-I (AD Category-I) banks is invited to A.P. (DIR Series) Circular No. 96 dated April 30, 2015 wherein the Rupee value of the Special Currency Basket was indicated as ₹ 85.4813 effective from April 16, 2015.

2. AD Category-I banks are advised that a further revision has taken place on April 27, 2015 and accordingly, the Rupee value of the Special Currency Basket has been fixed at ₹ 88.3042 with effect from April 30, 2015.

3. AD Category-I banks may bring the contents of this Circular to the notice of their constituents concerned.

4. The Directions contained in this circular have been issued under sections 10(4) and 11(1) of theForeign Exchange Management Act (FEMA), 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Attention of Authorised Dealer Category-I (AD Category-I) banks is invited to Schedule 2 of theForeign Exchange Management (Deposit) Regulations, 2000, notified vide Notification No. FEMA 5/2000-RB dated May 3, 2000, as amended from time to time, in terms of which instructions regarding opening and maintenance of FCNR (B) deposit have been stipulated.

2. It has come to our notice that Authorised Dealer banks are insisting on different requirements at the time of closure of FCNR (B) deposits and subsequent remittance of funds as under:

i. Submission of A2 form

ii. Insisting on physical presence of the account holder

iii. Asking for purpose of remittance

3. In this connection it is clarified that A2 form is to be filed at the time of purchase of foreign exchange using rupee funds and hence is not applicable while remitting FCNR (B) funds. Further, banks, with the help of technology, will have to devise better alternatives/ methods for ensuring bonafides of the transaction rather than insisting on physical presence of the account holder, in order to ensure hassle free remittance of funds to the account holder.

4. AD Category- I banks may bring the contents of the circular to the notice of their constituents concerned.

5. The directions contained in this circular have been issued under Sections 10(4) and 11(1) of theForeign Exchange Management Act, 1999 (42 of 1999) and is without prejudice to permissions / approvals, if any, required under any other law.

Export of Goods and Services- Declaration of Exports of Goods/Software

Attention of the Authorised Dealers is invited to Regulation 6 of the Notification No.FEMA 23/2000-RB dated May 3, 2000 viz. Foreign Exchange Management (Export of Goods and Services) Regulations, 2000, as amended from time to time, in terms of which every exporter of goods or software has to declare the same in one of the forms stated therein.

2. To further liberalise and simplify the procedure, it has been decided to dispense with the requirement of declaring the export of Goods /Software in the SDF in case of exports taking place through the EDI ports, as the mandatory statutory requirements contained in the SDF have been subsumed in the Shipping Bill format.

3. Authorised Dealers may bring the contents of this circular to the notice of their constituents concerned.

4. The directions contained in this circular have been issued under Section 10(4) and Section 11(1)of the FEMA, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully,

(A. K. Pandey)

Chief General Manager

No. 100 Dated: 14-5-2015

Exim Bank’s Line of Credit of USD 1 billion to the Government of Nepal – Circular – Dated 14-5-2015 – FEMA

RBI/2014-15/598

A.P. (DIR Series) Circular No. 100

May 14, 2015

To

All Category – I Authorised Dealer Banks

Madam / Sir,

Exim Bank’s Line of Credit of USD 1 billion to the Government of Nepal

Export-Import Bank of India (Exim Bank) has entered into an Agreement dated November 25, 2014 with the Government of Nepal, for making available to the latter, a Line of Credit (LOC) of USD 1 billion (USD One billion) for financing of hydropower, irrigation and infrastructure development projects in Nepal. The goods, machinery, equipment and services including consultancy services from India for exports under this Agreement are those which are eligible for export under the Foreign Trade Policy of the Government of India and whose purchase may be agreed to be financed by the Exim Bank under this Agreement. Out of the total credit by Exim Bank under this Agreement, the goods and services including consultancy services of the value of at least 75 per cent of the contract price shall be supplied by the seller from India except from civil works for which 50% of the contract price shall be supplied by the Seller from India.

2. The Credit Agreement under the LOC is effective from March 27, 2015. Under the LOC, the last date for opening of letters of credit and disbursement will be 48 months from the scheduled completion date of contract in the case of project exports and November 24, 2020 (72 months from the execution date of the Credit Agreement) in the case of other supply contracts.

3. Shipments under the LOC will have to be declared on EDF/ SDF Forms as per instructions issued by the Reserve Bank from time to time.

4. No agency commission is payable under the above LOC. However, if required, the exporter may use his own resources or utilize balances in his Exchange Earners’ Foreign Currency Account for payment of commission in free foreign exchange. Authorised Dealer Category- l (AD Category-l) banks may allow such remittance after realization of full payment of contract value subject to compliance with the prevailing instructions for payment of agency commission.

5. AD Category-I banks may bring the contents of this circular to the notice of their exporter constituents and advise them to obtain full details of the Line of Credit from the Exim Bank’s office at Centre One, Floor 21, World Trade Centre Complex, Cuffe Parade, Mumbai 400 005 or log on towww.eximbankindia.in

6. The Directions contained in this circular have been issued under sections 10(4) and 11(1) of theForeign Exchange Management Act (FEMA), 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully,

(A. K. Pandey)

Chief General Manager

No. 08/2015 Dated: 14-5-2015

Procedure for response to Arrear demand By Taxpayer And Verification and Correction Demand by AOs – Circular – Dated 14-5-2015 – Income Tax

CIRCULAR NO 08/2015

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

DEPARTMENT OF REVENUE

CENTRAL BOARD OF DIRECT TAXES

North Block, ITA-II, Division

New Delhi the 14.05.2015

Subject: Procedure for response to Arrear demand By Taxpayer And Verification and Correction Demand by AOs-regarding.

The CBDT vide Instruction No. 4 of 2014 dated 7th April 2014, inter-alia, prescribed Standard Operating Procedure for Verification and Correction of Demand available or uploaded by AOs in CPC Demand Portal. Further a facility has been made available to taxpayers on the E-filing website (www.incometaxidiaefiling.gov.in) to provide online responses to such demands. The actions required to be performed by the taxpayer and the AO are being consolidated in this circular as under:

ii. Go to E-file menu and click on “Response to Outstanding Tax Demand”.

iii. Following details would be displayed.

Assessment Year

Section Code

Demand Identification Number (DIN)

Date on which demand is raised

Outstanding demand amount

Uploaded By

Rectification Rights

Response- Submit and View

iv. Taxpayer must click on “Submit” link under Response column for the respective AY in order to submit the response. Taxpayer has to select one of the options from the radio button.

Demand is correct

Demand is partially correct

Disagree with demand

v. If taxpayer selects “Demand is correct”, than pop up is displayed as “If you confirm” Demand is correct then you cannot ‘Disagree with the demand’. Click on “Submit” A success message is displayed.

If any refund is due, the outstanding demand along with interest will be adjusted against the refund due.

In any other case taxpayer has to immediately pay the demand.

vi. If taxpayer selects “Demand is partially correct”, then “Amount which is correct” and ” Amount which is incorrect” has to entered.

vii. If tapayer selects ‘amount which is incorrect’ then he should mandatorily fill one or more reasons for stating so as listed below:

Demand has been already Paid -

Demand paid and Challan has CIN (Challan Identification Number)

Demand paid and Challan has no CIN

Demand has already been reduced by rectification/revision

Demand has already been reduced by Appellate Order but appear effect has to be given by Department

Appeal has been filed and

Stay petition has been filed with

Stay has been granted by

Instalment has been granted by

Rectification / Revised Return has been filed at CPC

Rectification has been filed with Assessing Officer

Others

viii. Based on the reasons selected, the taxpayer need to provide additional information as per the table given below.

Reason Selected

Additional Detail Required

Demand paid and Challan has CIN

BSR Code

Date of payment

Serial Number of challan

Amount

Remarks (any comments of taxpayer can be included)

Demand paid and Challan has no CIN

Date of payment

Amount

Remarks (any comments of taxpayer can be included)

Upload copy of Challan

Demand already reduced by rectification / Revision

Date of Order

Demand of AO who has rectified or revised

Upload Rectification / Giving appeal effect order passed by AO

Demand already reduced by Appellate Order but appeal effect to be given

Date of Order

Appellate Order passed by (details of CIT (A) etc)

Reference Number of Order

Appeal has been filed: Stay petition has been filed

Date of filing of appeal

Appeal Pending with (details of CIT (A) etc)

Stay petition filed with (details of office etc)

Appeal has been filed: Stay has been granted

Date of filling of appeal

Appeal Pending with

Stay granted by

Upload copy of Stay Order

Appeal has been filed Instalment has been granted

Date of filing of appeal

Appeal Pending with (details of CIT (A) etc)

Instalment granted by (details or office etc)

Upload copy of stay/instalment order

Rectification / Revised Return filed at CPC

Filing Type

e-Filed Acknowledgement No

Remarks (any comments of taxpayer can be included)

Upload Challan Copy

Upload TDS Certificate

Upload Letter requesting rectification copy

Upload Indemnity Bond

Rectification filed with AO

Date of application

Remarks (any comments of taxpayer can be included)

Other Reasons

Others (any comments of taxpayer can be included)

ix. If taxpayer selects “Disagree with the Demand” then taxpayer must furnish the details of disagreement along with reasons Details / Reasons are same as provided under “Demand is partially correct”.

x. After the taxpayer submits the response the success screen would be displayed along with the Transaction ID.

xi. The taxpayers can click on ‘View’ link under Response column to view the response submitted. The following details are displayed:

Serial Number

Transaction ID

Date of Response

Response Type

(Note 1: Where the taxpayer has not registered on the Income Tax Department’s e-filing website -www.incometaxindiaefiling.gov.in. he may do so to get details of outstanding demand and also to submit any response.

Note 2: Wherever the taxpayer finds it difficult to access income tAx Department Website, he or she may make necessary application to the Assessing Officer along with above referred details as applicable in this case.

Note 3: In case of individual taxpayers if CIN is not available or payment is made prior to the period of introduction of CIN, the taxpayer may submit the documents as referred in para 4.1 or 4.2)

3. Action on the Part of the Department

The Assessing Officer or CPC Bangalore after verification should reduce/remove/confirm the demand in appropriate cases as per procedure outlined in para 4 below and in accordance with earlier instructions issued by CBDT. However, following cases are to be verified on priority:

a) Taxpayer has furnished information in response to notice u/s 245 of the Act; or

b) Taxpayer has requested for reduction/removal of demand; or

c) Information regarding demand reduction/removal is available in Department Records; or

d) Details are already available in the system, such as additional TDS credits reported by Deductor in case of earlier TDS mismatch.

4. Handling Different Scenarios during Verification and Confirmation of Demand;

The Assessing Officer (AO) should handle different scenarios during verification and confirmation of demand in following manner:

4.1 Demand or tax has been paid:

(a) If the taxpayer’s reply or Departmental records show that demand or tax has already been paid and challan (Challan identification number (CIN)) is available on the system.

i. The AO should reduce the demand by posting the challan or passing rectification order u/s 154 on the system.

ii. If the demand is prior to 01/04/2010, the demand has to be reduced directly on the CPC-FAS system.

b) If CIN is not available or payment is made prior to the period of introduction of CIN, the reduction can be made only in case of Individuals and HUFs provided outstanding demand does not exceed Rs.1,00,000 for that AY. The AO should follow the steps as under:

i. The reduction can be made after obtaining of the document showing evidence of payment in form of taxpayer counterfoil or bank certificate or any communication from Department in respect of payment or adjustment of refund. In case where taxpayer is a senior citizen and taxpayer is not able to obtain bank certificate as the place of payment of tax is different from the current place of taxpayer, the AO should obtain the certificate from the bank directly.

ii. In case the outstanding demand is more than ₹ 25000/- for that AY irrespective of the quantum of demand being reduced under paragraph 4.1 (b) i. above, the AO should obtain an indemnity bond (in the format given in Annexure A) from the taxpayer.

iii. Additionally, in case the demand being reduced under paragraph 4.1 (b).i. above exceeds ₹ 50,000/- for that AY for the assessee, besides obtaining the indemnity bond, approval of Range Head should be taken on file before removing/reducing the demand.

iv. If the payment relates to mismatch of advance tax or self assessment tax, order u/s 154 of the Act needs to be passed.

4.2 Demand due to TDS Mismatch:

(a) If the taxpayer’s reply or Departmental records show that the demand is an account of TDS mismatch and TDS credits are available in the system, the AO should follow steps as under:

i. The AO should reduce the demand by passing rectification order u/s 154 on the system after taking into account the TDS credits available on the system.

ii. If the demand is prior to 01/04/2010, the demand has to be reduced directly on the CPC-FAS system after rectification u/s 154.

(b) If the credits are not available in 26AS: The reduction can be done only in the cases ofIndividuals and HUFs. Further, the amount of reduction should not exceed Rs.1,00,000 for that AY and AO should take following steps.

i. AO should pass order u/s 154 manually after obtaining the TDS certificate from the assessee ont he basis of which claim has been made.

ii. In case, the outstanding demand is more than ₹ 25,000 for that AY, irrespective of the quantum of demand being reduced, the AO should obtain an indemnity bond (in the format given in Annexure A)

iii) Additionally, in case the demand being reduced under paragraph 4.2. (b)i above, exceeds ₹ 50,000/- for that AY for the assessee, besides obtaining the indemnity bond, approval of Range Head should be taken or file before removing/reducing the demand.

4.3 Demand already reduced or action is pending:

(a) If the taxpayer’s reply or Departmental records show that demand has already been reduced by way of an order (rectification order, appeal effect order etc.), the demand has to be reduced directly on the CPC-FAS system.

(b) In case where rectification or giving effect order to reduce demand is pending, the same should be completed and revised demand should be reflected.

(c) It is also clarified that after taking action as per para 4.1 of 4.2, if any refund becomes due to the taxpayer, the same may also be issued.

1. The annual target of audit of minimum number of cases to be audited has been prescribed byparagraph III of the Instruction No. 3 of 2007 which reads as under:

III Internal Audit Auditable Cases: Norms and Targets

i. The minimum number of cases to be audited by each Additional CIT, SAP or IAP in a year shall be as under:

Additional CIT

:

50

SAP

:

300

IAP

:

600 (Corporate Cases); & 700 (Non- corporate Cases)

The Identical text has also been used in paragraph 3.1.(i) of the Chapter 3 of the Audit Manual 2011.

2. After the cadre restructuring, number of assessment units which are subject to audit both by the C&AG and the Internal Audit have increased substantially leading to increased workload of auditable cases. Accordingly, annual targets of auditable cases by Internal Audit have been re-examined. Currently the annual target of auditable cases by AddICIT/ JCIT has been fixed at 50 cases per annum i.e the monthly workload of the audit is only 4 cases. Taking into account increased workload of auditable cases and current annual target, it has been decided to enhance annual target of auditable cases for the AddI CIT/JCIT from 50 cases to 150 cases per annum. The annual target will give monthly workload of audit of 12 to 13 cases by the AddI CIT/JCIT. In cases, where posts of AddICIT/JCIT(Audit) are held as additional charge, Pr.CCIT may suitably adjust the annual target.

3. The C&AG while examining the wording of annual target for IAP has pointed out that word “&” between 600 (corporate cases) and 700 (non-corporate cases) in Instruction No.3 of 2007 gives the impression that the annual target of audit of minimum number of cases by IAP is fixed at 1300 cases ( 600 corporate cases & 700 non-corporate cases). The Board has clarified to the C & AG the annual target for auditable cases by the IAP is 600 corporate or 700 non-corporate cases. It has been decided to modify the wordings of the paragraph III (i) of Instruction No. 3 of 2007 relating to annual target for IAP by replacing the word “&” by “or” between 600 (Corporate Cases) and 700 (Non-corporate cases) to clarify the target of IAPs.

4. In view of above, sub paragraph (i) of paragraph III of Instruction No. 03 of 2007 dated 16.04.2007and paragraph 3.1.(i) of the Chapter 3 of the Audit Manual, 2011 are modified as under:

i. The minimum number of cases to be audited by each Additional CIT, SAP or IAP in a year shall be as under:

Additional CIT (Audit)

:

150

SAP

:

300

lAP

:

600 (Corporate Cases) or 700 (Non- corporate Cases)

5. The Instruction no 3 of 2007 is amended and supplemented with immediate effect.

6. This may be brought to notice of all officers working under your jurisdiction for compliance.

7. Hindi version of the Instruction will follow.

(Sunita Singh)

Director (A&PAC)

Copy to:-

1) Chairperson, CBDT

2) All Members, CBDT

3) All other officers of CBDT of the rank of Under Secretary and above

1. The annual target of audit of minimum number of cases to be audited has been prescribed byparagraph III of the Instruction No. 3 of 2007 which reads as under:

III Internal Audit Auditable Cases: Norms and Targets

i. The minimum number of cases to be audited by each Additional CIT, SAP or IAP in a year shall be as under:

Additional CIT

:

50

SAP

:

300

IAP

:

600 (Corporate Cases); & 700 (Non- corporate Cases)

The Identical text has also been used in paragraph 3.1.(i) of the Chapter 3 of the Audit Manual 2011.

2. After the cadre restructuring, number of assessment units which are subject to audit both by the C&AG and the Internal Audit have increased substantially leading to increased workload of auditable cases. Accordingly, annual targets of auditable cases by Internal Audit have been re-examined. Currently the annual target of auditable cases by AddICIT/ JCIT has been fixed at 50 cases per annum i.e the monthly workload of the audit is only 4 cases. Taking into account increased workload of auditable cases and current annual target, it has been decided to enhance annual target of auditable cases for the AddI CIT/JCIT from 50 cases to 150 cases per annum. The annual target will give monthly workload of audit of 12 to 13 cases by the AddI CIT/JCIT. In cases, where posts of AddICIT/JCIT(Audit) are held as additional charge, Pr.CCIT may suitably adjust the annual target.

3. The C&AG while examining the wording of annual target for IAP has pointed out that word “&” between 600 (corporate cases) and 700 (non-corporate cases) in Instruction No.3 of 2007 gives the impression that the annual target of audit of minimum number of cases by IAP is fixed at 1300 cases ( 600 corporate cases & 700 non-corporate cases). The Board has clarified to the C & AG the annual target for auditable cases by the IAP is 600 corporate or 700 non-corporate cases. It has been decided to modify the wordings of the paragraph III (i) of Instruction No. 3 of 2007 relating to annual target for IAP by replacing the word “&” by “or” between 600 (Corporate Cases) and 700 (Non-corporate cases) to clarify the target of IAPs.

4. In view of above, sub paragraph (i) of paragraph III of Instruction No. 03 of 2007 dated 16.04.2007and paragraph 3.1.(i) of the Chapter 3 of the Audit Manual, 2011 are modified as under:

i. The minimum number of cases to be audited by each Additional CIT, SAP or IAP in a year shall be as under:

Additional CIT (Audit)

:

150

SAP

:

300

lAP

:

600 (Corporate Cases) or 700 (Non- corporate Cases)

5. The Instruction no 3 of 2007 is amended and supplemented with immediate effect.

6. This may be brought to notice of all officers working under your jurisdiction for compliance.

7. Hindi version of the Instruction will follow.

(Sunita Singh)

Director (A&PAC)

Copy to:-

1) Chairperson, CBDT

2) All Members, CBDT

3) All other officers of CBDT of the rank of Under Secretary and above

4) DIT(PR,PP&OL), Mayur Bhawan, New Delhi

5) The Comptroller and Auditor General of India

6) The DGIT (Vigilance), New Delhi

7) The DGIT (NADT), Nagpur

8) ITCC Division, CBDT (3 copies)

9) Web manager irsoffrcersonline.gov.in

10) Hindi Section – for Hindi translation

(Sunita Singh)

Director (A&PAC)

How govt could meet April deadline on GST : 13-05-2015

Govt can advance the dates of the convening of the monsoon session of Parliament to early July.

There is still hope that the Goods and Services Tax will be rolled out by next April, despite it being referred to a Rajya Sabha select committee on Tuesday. But such a feat would require a favourable interplay of the schedules of the monsoon sessions of Parliament and 29 state legislatures. Half of these legislatures, or 15, need to ratify the Bill for it to become a law.

The Narendra Modi government, if it so wants, can advance the dates of the convening of the monsoon session of Parliament to early July, instead of the usual end-July or first week of August. The monsoon session of Parliament started in the first week of July in 2014 and 2009, but it is more common for Parliament to meet in the last week of July (in 2010) or first week of August (in 2011, 2012 and 2013). The President notifies the dates of a Parliament session on the advice of the Parliamentary Affairs Minister.

The Rajya Sabha select committee is to give its report on the Bill by the last day of the first week of the session. An early July session could give the government ample time to ensure passage of the Bill and transfer it to state legislative Assemblies.

Parliament and state legislatures hold a minimum of three sessions in a year. “The terms ‘monsoon’ or ‘winter’ sessions have been given by us for convenience. They do not find mention in the Constitution,” constitutional expert Subhash C Kashyap says.

Source : PTI

Bill on GST referred to select committee : 13-05-2015

The 21-member panel will give its report by the last day of the first week of the Monsoon session

A Constitution Amendment Bill providing for roll out of the Goods and Services Tax (GST) was on Tuesday referred to a select committee after the Opposition insisted on its legislative scrutiny of the proposed legislation in Rajya Sabha where the government faces the numbers crunch.

The 21-member panel will give its report by the last day of the first week of the Monsoon session.

Finance Minister Arun Jaitley moved the motion for referring the Bill (The Constitution One Hundred and Twenty-second Amendment Bill, 2014 to the Select Committee.

While AIADMK was the only party to have declared its opposition to the economic reform measure, the Congress was adamant that it should be sent to a Select Committee for examining the changes that were brought into it by the NDA dispensation.

The government on Tuesday referred the land acquisition bill to a joint committee of Parliament, paving the way for its passage in a joint sitting of Parliament after the monsoon session.

Rural development minister Birender Singh moved the motion for sending the bill to the joint panel after a detailed discussion forced by the opposition.

The discussion had Rahul Gandhi lead the Congress attack on the bill, amplifying his charge that Modi government’s changes to the UPA law were aimed at distributing land as largesse to crony capitalists while the Centre rejected the allegation to claim the bill was “pro farmer”.

The 30-member committee will comprise 20 MPs from Lok Sabha and 10 MPs from Rajya Sabha.

Sources said Congress took a late decision on joining the committee as there were two opinions in the party. While one group felt the party should not join the panel as it was against any changes to the 2013 law, the other felt Congress’ absence could give the government a free run. The names of KV Thomas and Rajiv Satav were then suggested.

The panel is likely to submit its report in the first week of the monsoon session – roughly by the end of July. It will result in the convening of a joint sitting by August or September.

Though lacking numbers in the upper House, the Centre is not concerned about the defeat of the bill but is keen that it is disposed of. The conditions laid out by Parliament rules for calling a joint sitting state that it can take up a legislation which has been rejected by one of the two Houses.

The Centre is confident that it will have the numbers to push the bill through in the joint sitting of Lok Sabha and Rajya Sabha.

Eager to retrieve the bill from the parliamentary quagmire owing to its minority in the upper House, the choice of a joint committee appears deliberate. Such a panel has to submit its report in the first week of the next Parliament session while a select committee can discuss indefinitely.

Moreover, a joint panel will have a majority from Lok Sabha, thereby giving the Centre an upper hand in the voting over provisions to be accepted.

A joint committee will preempt the possibility of a vetting panel sitting on the bill as a select committee can do. It will ensure that the government can table the bill in Lok Sabha in the monsoon session. Its passage in Lok Sabha is assured and its rejection in the upper House will clear the hurdles for a joint sitting.

Source : The Economic Times

Notification No. : S.O. 1051(E) Dated: 13-4-2015

Set up a sector specific Special Economic Zone for Engineering and related industries (formerly, light engineering including automotive/automotive components ) at Kalwara, Bhamboriya, Bagru Khurd and Jhai Village, Tehsil Sanganer, District Jaipur, in the State of Rajasthan – S.O. 1051(E) – Dated 13-4-2015 – Special Economic Zone

MINISTRY OF COMMERCE AND INDUSTRY

(Department of Commerce)

NOTIFICATION

New Delhi, the 13th April, 2015

S.O. 1051(E).-Whereas, M/s. Mahindra World City (Jaipur) Limited, had proposed under section 3 of the Special Economic Zones Act, 2005 (28 of 2005), (hereinafter referred to as the said Act) to set up a sector specific Special Economic Zone for Engineering and related industries (formerly, light engineering including automotive/automotive components ) at Kalwara, Bhamboriya, Bagru Khurd and Jhai Village, Tehsil Sanganer, District Jaipur, in the State of Rajasthan;

And, whereas, the Central Government, in exercise of the powers conferred by sub-section (1) of Section 4 of the said Act read with rule 8 of the Special Economic Zones Rules, 2006, had notified areas of 103.1775 hectares and 119.4955 hectares at above Special Economic Zone vide Ministry of Commerce and Industry Notification Numbers S.O. 37(E), dated 6th January, 2009 and S.O 341(E) dated 28th February, 2012 respectively;

And, whereas, the Central Government in exercise of the powers conferred by second proviso tosubsection (1) of Section 4 of the Special Economic Zones Act, 2005 and in pursuance of rule 8 of the Special Economic Zones Rules, 2006, had notified an area of 16.42 hectares and de-notified an area of 4.404 hectares vide Ministry of Commerce and Industry Notification Number S.O. 3253(E) dated 23rd October, 2013.

And, whereas, M/s. Mahindra World City (Jaipur) Limited, has now proposed to include an area of 0.201 hectares and decrease an area of 1.522 hectares from the above Special Economic Zone;

Now, therefore, in exercise of the powers conferred by second proviso to sub-section (1) of section 4of the Special Economic Zones Act, 2005 and in pursuance of rule 8 of the Special Economic Zones Rules, 2006, the Central Government hereby notifies an area of 0.201 hectares and de-notifies an area of 1.522 hectares, thereby making total area of the Special Economic Zone as 233.368 hectares, comprising the survey numbers and the area given below in the table, namely:-

TABLE FOR ADDITIONAL AREA

S. No.

Name of the Village

Khasra No.

Area (in Hectares)

1

Bhambhoriya

1007

0.010

2

1045

0.070

3

1095

0.010

4

1108

0.014

5

1109

0.014

6

1110

0.013

7

1111

0.050

8

1113

0.020

Total

0.2010 hectares

TABLE FOR DE NOTIFICATION

S. No.

Name of the Village

Khasra No.

Area (in Hectares)

1

Bhambhoriya

947

0.020

2

960

0.840

3

1025

0.015

4

1044

0.012

5

1107

0.008

6

1123

0.001

7

1124

0.001

8

1141

0.008

9

1152

0.055

10

1154

0.082

11

957

0.050

12

Bagru Khurd

928

0.430

Total

1.522 hectares

Grant total of the SEZ area after addition and denotification

233.368 hectares

[F. No. F.1/280/2007-SEZ]

Dr. GURUPRASAD MOHAPATRA, Jt. Secy.

Breather for FIIs: Centre puts MAT notices on hold : 12-05-2015

In yet another relief for the Foreign Institutional Investors (FIIs), the tax authorities have put on hold issuance of new notices as well as action on already issued notices.

“In the light of Finance Minister’s announcement (made in Rajya Sabha on May 7), no coercive action be taken for recovery of demand already raised by invoking provisions of MAT (Minimum Alternate Tax) in the cases for foreign companies. Issue of fresh notices for re-opening of cases as also completion of assessment should also be put on hold unless the case is getting barred by limitation,” a Central Board of Direct Taxes said.

A directive issued to Principal Chief Commissioners and Chief Commissioners (International Taxation) in Delhi, Mumbai, and Bengaluru was sent on Monday. This was in response to the Finance Minister’s announcement about constituting a Committee headed by Justice AP Shah to look into the issue of MAT on FIIs. The Committee is expected to give its report on this issue expeditiously.

The Finance Bill had proposed exempting MAT on FII or FPI (Foreign Portfolio Investors) from April 1, 2015. However, the controversy began when tax authorities issued ₹602.83 crore demand notices in 68 cases of overseas funds to pay MAT for ‘untaxed gains’ made by them in the Indian markets over the past years. This shocked the market which witnessed sharp withdrawal of funds by FIIs.

The Income-Tax Department has imposed 20 per cent MAT on capital gains made by FPIs. All these along with weak global signals shook the market and it is estimated that overseas investors pulled out nearly ₹10,000 crore from the Indian capital markets last week.

Commenting on the latest move, Rajesh H Gandhi, Partner, Deloitte Haskins, said “FIIs should therefore be relieved to know that no further notices will be issued till the committee issued its report,” he said.

Echoing similar sentiment, Sameer Gupta, Tax leader for financial services, EY India said that there are a few blocks moving finally. The Castleton case is now set for early hearing by the Supreme Court in August.

Shah panel may look at ‘Vodafone type’ tax disputes

The Finance Ministry is likely to consider including Vodafone type of disputes in Terms of Reference (TOR) for the Justice A P Shah Panel. TOR is expected to be announced soon. Inclusion of Vodafone kind of cases is because of legacy which is making things difficult for the Government in providing relief to foreign companies.

Source : Business Line

Land Bill to go to joint committee, GST to Rajya Sabha : 12-05-2015

A 30-member joint committee will be set up to look into the land bill and will be headed by Darjeeling BJP MP S.S. Ahluwalia.

The controversial Land Acquisition Bill will be referred to a joint committee of both Houses of the Parliament on Tuesday, while the Goods and Services Tax (GST) Bill will be referred to a select committee of the Rajya Sabha.

A 30-member joint committee will be set up to look into the land bill and will be headed by Darjeeling Bharatiya Janata Party (BJP) MP S.S. Ahluwalia. The committee will have 20 members from the Lok Sabha and 10 members from the Rajya Sabha.

Opposition parties are persistently objecting to the Land Bill, dubbing the legislation as ‘anti-farmer’ and the Prime Minister Modi led-Government has apprehensions over its passage in the Rajya Sabha, where it is in minority.

Meanwhile, the GST Bill is also expected to be sent to a select committee of the Rajya Sabha. The select committee on GST could have either 15 or 21 members.

All India Anna Dravida Munnetra Kazhagam (AIADMK) is the only party to oppose the GST Bill, while the Congress insists that it should be sent to a select committee to examine the changes brought in it by the NDA regime.

The GST Bill seeks to create a comprehensive new indirect tax regime to levy taxes on manufacture, sale and consumption of goods as well as services at the national level.

Finance Minister has, while responding to the discussions on the Finance Bill in Rajya Sabha on 7th May, 2015, announced constitution of a Committee headed by Justice A.P. Shah to look into, inter alia, the issue of MAT on FIIs. The Committee is expected to give its report on this issue expeditiously.

In the light of FM’s announcement, no coercive action be taken for recovery of demand already raised by invoking provisions of MAT in the cases for foreign companies. Issue of fresh notices for reopening of cases as also completion of assessment should also be put on hold unless the case is getting barred by limitation.

This issues with the approval of Chairperson, CBDT

(Dr. B.K. Sinha)

CIT(C&S), CBDT

Will not take coercive action against FIIs on MAT: Govt : 09-05-2015

The move comes a day after the ministry announced it would set up a panel to look into the issue.

The finance ministry on Friday said the income tax department wouldn’t adopt coercive methods for recovery of minimum alternate tax (MAT) dues from foreign investors. “Field officers will not push for any coercive demand on MAT claims right now,” said a ministry official.

The move comes a day after the ministry announced it would set up a panel to look into the issue. While the ministry is drafting the terms of reference of the panel, to be announced in four days, sources said the panel’s report would give a “policy direction to tax officers on applicability of MAT on FIIs (foreign institutional investors)”.

On Friday, Revenue Secretary Shaktikanta Das met Law Commission Chairman A P Shah, who is to head the panel on recovery of MAT dues from FIIs. The committee would primarily comprise tax experts, sources said, adding the ministry was working on a time limit for the committee to submit a report.

The report wouldn’t be binding on the government, they said, adding as cases pertaining to the matter were pending in courts, the report would give a direction to the government to resolving these disputes. The tax department has issued notices to 68 FIIs, totalling Rs 602 crore, for non-payment of MAT at 20 per cent of the profits earned.

Besides MAT, the committee will also look into the direct tax policies and legacy issues that lead to uncertainty in tax administration.

Source : PTI

GST preparations: Green signal for IT network : 09-05-2015

Finance ministers’ panel says this work needn’t wait; discusses proposed rate for tax but no decision; asks Centre for more foreign study

State finance ministers on Friday authorised GST Network, a non-profit company, to start work on an information technology (IT) ‘backbone’ for the proposed national goods and services tax (GST).

The cost of the network would be, it was decided, shared equally by Centre and states. April 1 next year is the Centre’s target date for the GST.

The Empowered Committee of State Finance Ministers (EC) concluded a two-day meeting in Thiruvananthapuram on Friday. It could not decide on the key issue of a GST rate.

It decided to ask the Centre to allow its members to visit some countries having a GST.

The two-day meet approved a sub-committee’s report on an integrated GST (I-GST) to be imposed on interstate movement of goods and services. The tax will be collected by the Centre and distributed to the states. The EC did not take up the issue of whether to raise the one per cent tax meant to help manufacturing states.

The committee got different views on a sub-panel report on registration, returns and refunds. It asked a panel to review the report.

“We have authorised the GST Network to go ahead with their work, based on the reports presented and discussed. Small changes, if needed, could be made after the revised reports. GSTN can always tweak the IT platform to incorporate the changes,” K M Mani, the EC chairman and Kerala finance minister, told journalists.

He exuded confidence that the required IT platform would be ready by the time GST was introduced. “This is the most crucial work,” he said.

The committee agreed to share the cost of GSTN, as mentioned earlier, by states and Centre equally. “The modalities of payment by states is to be decided by a sub-committee proposed to be constituted for this purpose,” Mani said.

GSTN is a company set up to provide IT infrastructure and services to the central and state governments, and other stakeholders, for implementation of GST. The Centre and states hold 24.5 per cent each in the company; 51 per cent equity is with non-government financial institutions.

The EC discussed the issue of a GST rate. An EC sub-committee had recommended an almost 27 per cent ‘revenue-neutral’ rate (RNR, meaning no revenue loss to states after subsuming existing taxes in the proposed system). The state GST (SGST) component would be 13.91 per cent; central GST was to be 12.77 per cent. The committee had also proposed a narrow band for the SGST component.

The recommendations were referred by the EC to the National Institute of Public Finance and Policy, since it was based on revenue collection figures of 2011-12. Union finance minister Arun Jaitley had on Wednesday said, “I straightaway concede that 27 per cent would be very high…after this (rate) was born, states and Centre decided to keep alcohol out.”

As mentioned earlier, the committee decided to request the Centre to depute EC members to visit some countries where GST has been implemented, to understand the method. “This will be useful for efficient implementation in India,” Mani said.

EC members have already toured Canada, Japan and South Africa to study GST models there.

Meanwhile, Y Ramakrishnudu, finance minister in Andhra Pradesh, ruled by an ally of the ruling coalition at the centre, criticised the Constitution amendment bill on GST for keeping petroleum and tobacco within the legislation’s ambit.

He said at Friday’s meeting that despite repeated requests to the Union government to not include advertisement tax collected by local bodies and betting and gambling taxes under the GST regime, the legislation includes these.

S.O. - Whereas the Central Government in exercise of the powers conferred by clause (iii) of sub-section (4) of section 80-IA of the Income-tax Act, 1961)(43 of 1961)(hereinafter referred to as the said Act), has framed and notified a scheme for industrial park, by the notifications of the Government of India vide number S.O. 50 (E), dated the 8th January, 2008 subsequently amended vide Notification No. S.O. 1605 (E), dated 2nd July, 2008 and vide Notification S.O. No. 1210(E), dated 21.5.2010.

Now, therefore, in exercise of the powers conferred by clause (iii) of sub-section (4) of section 80-IAof the said Act, the Central Government hereby notifies the undertaking from the date of commencement i.e. 29-3-2011, being developed and being maintained and operated by M/s Dosti Corporation (Pinnacle), as an undertaking and the project named “Dosti Pinnacle” placed at Plot No. E-7, MIDC, Road No.22, Wagle Industrial Area, Panchpakhdi, Thane (West), Maharashtra for the purposes of the said clause (iii) subject to the terms and conditions mentioned in the annexure of the notification.

ANNEXURE

The terms and conditions on which the approval of the Government of india has been accorded for setting up of an industrial park by M/s. Dosti Corporation (Pinnacle), Mumbai.

2. The Industrial Park shall be construed as developed on the date of commencement i.e. 29-3-2011 as mentioned in the Certificate furnished by the undertaking and issued by the Maharashtra Industrial Development Corporation, Thane.

3. The Industrial Park should be owned by one undertaking.

4. The tax benefits under the Act will be available to the undertaking only after minimum number of thirty industrial units are located in the Industrial Park. For the purpose of computing the minimum number of industrial units, all units of a person and his associated enterprises will be treated as a single unit.

5. No industrial unit, alongwith the units of an associated enterprise, shall occupy more than twenty five per cent of the allocable area.

6. The tax benefits under the Act will be available only to the undertaking notified vide this notification and not to any other person who may subsequently develop, develops and operates or maintains and operates the notified industrial park, for any reason.

7. The undertaking subject to the fulfilment of other conditions, may at its option claim deduction under section 80-IA (4)(iii) of the Income tax Act, 1961 for any ten consecutive assessment years out of fifteen years beginning from the assessment year relevant to the date of commencement of industrial park mentioned in this notification.

8. The Industrial units located in the industrial park shall undertake only those activities as specified in Industrial Park Scheme, 2008.

9. The undertaking must keep separate books of account for the industrial park and must file its income tax returns by the due date to the income-tax department.

10. The notification will be invalid and Dosti Corporation (Pinnacle), Mumbai shall be solely responsible for any repercussions of such invalidity, if

(i) the application on the basis of which the approval is accorded by the Central Government contains wrong information/misinformation or some material information has not been provided in it.

(ii) it is for the location of the industrial park for which approval has already been accorded in the name of another undertaking.

11. The undertaking shall furnish an annual report to the Central Board of Direct Taxes in Form IPS-II.

12. The conditions mentioned in this notification as well as those included in the Industrial Park Scheme, 2008 should be adhered to during the period for which benefits under this scheme are to be availed. The Central Government may withdraw the above approval in case the undertaking, fails to comply with any of the conditions.

13. Any amendment of the project plan without the approval of the Central Government or detection in future, or failure on the part of the applicant to disclose any material fact, will invalidate the approval of the industrial park.

G.S.R. (E).- In the notification of the Government of India, in the Ministry of Finance (Department of Revenue),-

(i) No.26/2015-Central Excise, dated the 30th April, 2015 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 344(E) dated the 30th April, 2015, in page 13, in line 37, for “shall apply” read “shall also apply”.

(ii) No.27/2015-Central Excise, dated the 30th April, 2015 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 345(E) dated the 30th April, 2015, in page 14, in line 27, for “shall apply” read “shall also apply”.

[F. No. 334/5/2015-TRU]

(Akshay Joshi)

Under Secretary to the Government of India

Raise additional tax to 2% and make it permanent: Congress on GST : 08-05-2015

CHANDIGARH: Haryana Congress today termed the Constitutional Amendment Bill for rolling out the Goods and Services Tax, passed by the Lok Sabha yesterday, as “riddled with intrinsic flaws” saying, which, if not plugged, are bound to dent the finances and adversely affect the state’s economy.

“It seeks to punish Haryana on two counts for being a producing state and for being the second largest contributor to the central grain pool in the country,” Haryana Congress Legislature Party (CLP) leader Kiran Choudhry said.

In a statement here, the former Excise and Taxation Minister said that a fundamental flaw with the Bill that needed to be fixed immediately is the one per cent additional tax producing states will be allowed to impose on the goods exported.

“This provision will hurt Haryana and should be amended to raise the additional tax to two per cent. Besides, the imposition of tax should not be limited to two years only but built into the Act for ever. If not done, it will seek to disincentivize the producing states which would act as a drag on the economy,” she demanded.

“GST will be levied on buyers of goods and services or where the service is consumed. It means that big consuming states such as UP, West Bengal, Kerala could get a high share of the taxes at the expense of the manufacturing states which defies logic,” she said.

She said that while the four per cent purchase tax on grains, levied by Haryana will be subsumed in GST, other charges like rural development fee, market fee (mandi tax), infrastructure development tax and commission to societies and sub-agents may continue in the new regime.

“I, as Excise and Taxation Minister, kept pressing more than four years that the purchase tax on foodgrains should not be subsumed. If it has been, what inbuilt mechanism has been put in place in the measure to compensate the states for the loss, especially Haryana, which will be among the biggest sufferers? We will lose several thousand crores of rupees on this account alone,” she added.

NEW DELHI: The high level committee, announced by Finance Minister Arun Jaitley today, would give its first recommendations on the issue of imposition of MAT on foreign investors, Finance Ministry said today.

“Issue of MAT on FIIs is being referred (to the Committee) with a request to give report expeditiously,” Revenue Secretary Shaktikanta Das told PTI.

The government will soon notify the Terms of Reference of the Committee, he said.

“Cases of individual companies will not be referred. Only policy issues will be referred,” Das added.

Replying to a debate on Finance Bill in the Rajya Sabha, Jaitley had announced that a high-level committee, headed by Justice AP Shah, the chairman of the Law Commission, will look into the controversial issue of payment of Minimum Alternate Tax (MAT) by FIIs.
The committee would also look into few other tax issues, which are essentially legacy issues.

“The Government will consider the recommendation of the committee and take an appropriate decision as early as possible,” Jaitley had said.

Following a decision of the Authority of Advance Ruling (AAR), Income Tax department had slapped notices on 68 foreign portfolio investors (FPI) saying they have to pay 20 per cent MAT totalling Rs 602.83 crore on untaxed capital gains made by them over the past three years.

Following that some FPIs have approached the courts against the tax department.

While foreign investors have been exempted from paying MAT from current fiscal, the tax demands of previous fiscals still stands in view of the 2012 decision of the AAR.

Source : PTI

Independent public debt management office may be set up in phased manner : 08-05-2015

NEW DELHI: India is proposing to set up an independent debt management office in a phased manner and will begin discussions with the Reserve Bank of India (RBI) on its contours after the completion of the ongoing budget session, a government official said.

The finance ministry has already drawn up a road map for transfer of public debt management and government borrowing functions from the RBI to the proposed agency. The proposal has been shared with the central bank.

Finance minister Arun Jaitley had withdrawn proposals moved in the finance bill to create an independent public debt management agency or PDMA. The central bank, which manages the government’s debt, had expressed reservations despite several rounds of discussions and agreeing to its inclusion as a budget proposal. Some RBI officials had written to lawmakers and state chief ministers raising concerns over the proposal.

Many members had subsequently opposed the inclusion of the key reform in the finance bill.

The government is, however, firm on seeing the proposal through. “Having an independent debt management office is also the best international practice in countries like the US and the UK,” finance minister Arun Jaitley had said in Lok Sabha while withdrawing the provision from the finance bill. Public debt management and regulation of government securities and other derivatives aren’t handled by the central banks in those countries, he had said.

“Since the RBI has been handling public debt management, the government in consultation with the RBI will prepare a detailed roadmap separating the debt-management function and the market infrastructure from the RBI and having a unified financial market,” he had said. The idea, seen as crucial to efficient functioning of the new inflation targeting monetary policy framework, was mooted by the RBI itself for the first time in its 2000-0 01 annual report.

Source : The Economic Times

GST rates likely to be in the range of 20-23% : 07-05-2015

NIPFP working on this and Jaitley tells Lok Sabha 27% is too high; also says will be ensuring against cascade effect of origin tax; finance ministers’ panel meets today.

The proposed national goods and services tax (GST) rates could be 20-23 per cent, if recommendations of the National Institute of Public Finance and Policy (NIPFP) are accepted by the Centre and states.

Sources said NIPFP is going to recommend this range to the Empowered Committee (EC) of State Finance Ministers. The panel meets in Thiruvananthapuram on Thursday and this item might be discussed, though the report has not been given yet. The meet will also take up the issue of compensation to states and an information technology ‘backbone’ for the GST, termed GST-Network.

In the Lok Sabha, on the GST amendment Bill, Finance Minister Arun Jaitley said the rates would be much below the 27 per cent recommended by a sub-panel of the EC. “I straightaway concede that 27 per cent would be very high…after this 27 per cent (revenue-neutral rate or RNR, at which no revenue loss to states is likely on adoption of GST) was born, the states and the Centre have decided to keep alcohol out,” he said. Adding that both had the same view on this.

“We have decided to keep petroleum out and no state is interested in imposing higher taxes on its people and neither the central government. Therefore, this (RNR) figure is going to be much more diluted compared to the figure (27 per cent) mentioned,” he said.

He said the 13th Finance Commission had suggested 18 per cent as a possible figure. However, it had also suggested a different model of GST compared to what is being considered now.

Currently, the Union excise duty rate is 12 per cent on most goods, while value-added tax (VAT) is 12.5 per cent in most states. This combines to 24.5 per cent. Then, there are purchase taxes in some states and a central sales tax of two per cent on inter-state movement of goods. From this point of view, a goods tax at 27 per cent seems too high, given that VAT also gives input credit and so does excise duty in most cases.

Service tax will, however, be 14 per cent from June and making it 27 per cent would again be too high a rate. Currently, only the Centre can impose service tax.

On the 27 per cent RNR recommended earlier by a EC panel, the state GST (SGST) component was recommended at 13.91 per cent and central GST at 12.77 per cent. The committee had also proposed a narrow band for the SGST component.

The recommendations were referred by the EC to NIPFP, since it was based on revenue collection figures of 2011-12.

Prashant Deshpande, Senior Director, Deloitte in India, said 27 per cent GST rate would be a non-starter. “The rate should address the issue of all — industry, states and consumers,” Deshpande said.

GST rates are not part of the constitutional amendment Bill. It would be decided later by the proposed GST Council, comprising the Union and state finance ministers.

The Bill also tries to allay the concerns of manufacturing states. It seeks to impose a one per cent origin tax, to be given to these states. However, there are concerns that this tax will have a cascade effect and, hence, work against the overall theme of a GST. Jaitley assured the Lok Sabha that this was being worked out, to ensure this did not happen.

Harishanker Subramaniam, national leader-indirect tax services, EY India, says: “The FM’s statement that the one per cent origin tax will not be cascading, though welcome, needs to be reflected in fine print.”

The Lok Sabha rejected many amendments moved by opposition parties, including keeping petroleum outside a GST and imposition of an environmental tax for mineral-rich states like Odisha.

Jaitley assured the states that their losses would be met by the Centre through a tapering mechanism for five years. The Centre would give the states full compensation for the first three years, 75 per cent in the fourth year and 50 per cent in the fifth. Some opposition parties, such as Tamil Nadu’s AIADMK, wanted to know what would happen to states after five years. Jaitley tried to convince them that they’d not incur losses in the first place because they’d be imposing a service tax as well.

Source : PTI

Changes in FEMA okayed to facilitate REITs : 07-05-2015

NEW DELHI, MAY 6:

The Cabinet on Wednesday gave its approval to allow the Real Estate Investment Trusts (REITs) as an eligible financial instrument/structure under the Foreign Exchange Management Act (FEMA) 1999. “This is expected to enable foreign investment inflows into the completed rent yielding real estate projects, which is, as of now, prohibited under the FEMA Regulations,” an official statement said.

As a result of this decision, entities registered and regulated under the SEBI (REITs) Regulations 2014 will be able to access foreign investments which as of now are prohibited under the FEMA Regulations. This will help real estate companies such as DLF, among others, which intend to set up REITs.

This is the second booster for the instrument after Finance Minister Arun Jaitley had proposed some benefits in the Budget this year. He proposed rationalising the capital gains regime for the sponsors exiting at the time of listing of the units of REIT, subject to payment of Securities Transaction Tax (STT).

The rental income of REITs from their own assets will have pass through facility, he had said.

He also recently provided exemption from Minimum Alternate Tax (MAT) to REIT during amendment in the Finance Bill.

Prime Minister Narendra Modi sank his finance minister’s plans to strip powers from the Reserve Bank of Inida (RBI) last week, sources told Reuters, evidence of a new-found respect for the bank’s governor and a recognition that Modi needs his calming influence on markets.

When Modi came to power just under a year ago, the position of central bank boss Raghuram Rajan, an appointee of the outgoing Congress government, looked precarious.

Senior members of Modi’s Bharatiya Janata Party (BJP) chided Rajan for his tough stance on interest rates, which threatened the Prime Minister’s pledge to reboot economic growth, and the governor in turn cautioned the government against putting too much faith in exports through its ‘Make in India’ policy.

But when Finance Minister Arun Jaitley, one of Modi’s closest allies, dropped plans on Thursday to remove the bank’s authority to regulate the government bond market and manage public debt, a senior government source who was privy to discussions said the decision “came from the very top”.

A senior BJP figure confirmed that Modi had intervened on Rajan’s behalf.

The prime minister’s office and the finance minister did not respond to requests for comment.

Jaitley now intends to consult the RBI and come up with a detailed roadmap on the issue, a process that could take at least a year, officials say.

There were signs last month of the changing dynamics in the relationship between 52-year-old Rajan and Modi, 64, when the prime minister publicly praised Rajan for “perfectly” explaining complex economic issues to him in regular one-on-one meetings.

S.O.1371(E).-Whereas, a Protocol amending the Convention between the Republic of India and the Kingdom of Denmark for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital, and the Protocol on provisions on clarification of the Convention which were signed at Copenhagen on the 8th March, 1989 (hereinafter referred to as the said Protocol) as set out in the Annexure to this notification, was entered into between the Government of the Republic of India and the Government of the Kingdom of Denmark and was signed on the 10th day of October, 2013;

And whereas, the date of entry into force of the said Protocol is the 1st February, 2015, being the date of the first day of the month following the date of receipt of the later of the notifications of completion of the procedures as required for the bringing into force the said Protocol, in accordance with paragraph 1 of article 3 of the said Protocol;

Now, therefore, in exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby directs that all the provisions of the said Protocol between the Government of the Republic of India and the Government of the Kingdom of Denmark as set out in the Annexure hereto, shall be given effect to in the Union of India with effect from the first day of February, 2015.

[F. No. 503/02/ 1998-FTD-I]

AKHILESH RANJAN, Jt. Secy.

PROTOCOL

AMENDING THE CONVENTION BETWEEN THE REPUBLIC OF INDIA AND THE KINGDOM OF DENMARK FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL, AND THE PROTOCOL ON PROVISIONS ON CLARIFICATION OF THE CONVENTION WHICH WERE BOTH SIGNED AT COPENHAGEN ON 8TH MARCH, 1989.

The Government of the Republic of India

and

the Government of the Kingdom of Denmark;

Desiring to conclude a Protocol (hereinafter referred to as “Amending Protocol”) to amend the Convention between the Republic of India and the Kingdom of Denmark for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital, and the Protocol on provisions on clarification of the Convention which were both signed at Copenhagen on 8th March, 1989 and which entered into force on 13th June, 1989 (hereinafter referred to as “the Convention” and “the Protocol on provisions on clarification of the Convention” respectively);

Have agreed on the following provisions which shall have effect between India and Denmark and in accordance with the protocol extending the Convention to apply in its entirety to the Faroe islands which was signed at Copenhagen on 8th March, 1989 also between India and the Faroe islands:

Article 1

Article 26 of the Convention shall be deleted and replaced by the following Article:

“Article 26

EXCHANGE OF INFORMATION

1 The competent authorities of the Contracting States shall exchange such information (including documents or certified copies of the documents) as is foreseeably relevant for carrying out the provisions of this Convention or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions or local authorities thereof, insofar as the taxation thereunder is not contrary to the Convention. The exchange of information is not restricted by Articles 1 and 2.

2. Any information received under paragraph 1 by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, the determination of appeals in relation to the taxes referred to in paragraph 1, or the oversight of the above. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. Notwithstanding the foregoing, information received by a Contracting State may be used for other purposes when such information may be used for such other purposes under the laws of both Contracting States and the Competent Authority of the Supplying State authorises such use.

3. In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation:

(a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;

(b) to supply information (including documents or certified copies of the documents) which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;

(c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information the disclosure of which would be contrary to public policy (ordre public).

4. If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information.

5. In no case shall the provisions of paragraph 3 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person.”

Article 2

The following paragraph 3 shall be inserted after paragraph 2 of the Protocol to the Convention on provisions on clarification of the Convention:

“3. With reference to Article 26, it is understood that as stated in paragraph 9.1 of OECD commentary on Article 26, the new wordings (as per 2010 version) of Article 26 covers Tax Examinations Abroad.”

Article 3

1. Each of the Contracting States shall notify to the other the completion of the procedures required as far as it is concerned for the bringing into force of this Protocol. The Protocol shall enter into force on the first day of the month following t4 e date of receipt of the later of these notifications.

2. The provisions of this Protocol shall remain in force as long as the Convention remains in force.

Done in duplicate at Copenhagen on 10th October, 2013 in the Hindi, Danish and English languages, all three texts being authentic. In case of divergent interpretation of the Hindi and the Danish text the English text shall prevail.

Kind attention is invited to Notification No. 8/2015 – Central Excise (NT) dated 1-3-2015 amending Central Excise Rules, 2002 (CER). Representations have been received from trade regarding the scope and purpose of third and fourth proviso inserted in sub-rule (2) of rule 11 particularly with reference to procedural requirement after the amendment where an indenting or unregistered dealer negotiates transit sale. For ease of reference these two provisos are reproduced below -

“ Provided also that if the goods are directly sent to any person on the direction of the registered dealer, the invoice shall also contain the details of the registered dealer as the buyer and the person as the consignee, and that person shall take CENVAT credit on the basis of the registered dealer’s invoice:

Provided also that if the goods imported under the cover of a bill of entry are sent directly to buyer’s premises, the invoice issued by the importer shall mention that goods are sent directly from the place or port of import to the buyer’s premises. “

2. Clarification has also been requested by the trade regarding continued applicability of circular no 96/7/95-CX dt 13-2-1995, 137/48/95-CX dt 18-7-1995 and 218/52/96-CX dt 4-6-1996, in so far as these circulars pertain to availment of credit on strength of original manufacturer’s invoice where a dealer including an indenting dealer has procured order and has arranged direct transport of the goods from the premises of the manufacturer to the premises of the consignee. Further, clarification has also been sought regarding change in the requirement of registration for dealers consequent upon amendment in the rules.

3. The issue involved has been examined. It is clarified that the purpose of inserting the third

and fourth provisos in sub-rule (2) of Rule 11 of CER is to allow an additional facility for direct transport of goods from the manufacturer or the importer to the consignee where the consignee avails Cenvat Credit on the basis of the Cenvatable invoice issued by the registered dealer or the registered importer. This facility obviates the need for the goods to be brought to the premises of the registered importer or the registered dealer for subsequent transport of the goods to the consignee.

4. It is further clarified that the provisions of the circulars on the issues referred in Para 3 would continue to apply as no amendment has been made in rule 9 of the Cenvat Credit Rules, 2004 which prescribes the document on the basis of which Cenvat Credit can be availed. No amendments have been made regarding registration requirements also.

5. Various specific issues referred to by the trade are clarified as follows -

(i) Where a registered dealer negotiates sale of an entire consignment from a manufacturer or a registered importer and orders direct transport of goods to the consignee, credit can be availed by the consignee on the basis of invoice issued by the manufacturer or the registered importer. In such cases no Cenvatable invoice shall be issued by the registered dealer in favour of the consignee though commercial invoice can be issued. Where a registered dealer negotiates sale of goods from the total stock ordered on a manufacturer or an importer to multiple buyers and orders direct transportation of goods to the consignees and the manufacturer or the importer is willing to issue individual invoices for each sale in favour of the consignees for such individual sale, the same procedure shall apply.

(ii) Where a registered dealer negotiates sale by splitting a consignment procured from a manufacturer or a registered importer and issues Cenvatable invoices for each of the sale, it would now be possible for the dealer to order direct transport of the consignments as per the individual sales to the consignee without bringing the goods to his godown. This would save time and transportation cost for the dealer adding to ease of doing business. This is a new facility which flows from the amended provisions. Procedure as prescribed in the third proviso of rule 11(2) shall be applicable in such case.

(iii) Where a un-registered dealer negotiates sale of an entire consignment from a manufacturer or a registered importer and orders direct transport of goods to the consignee, credit can be availed by the consignee on the basis of invoice issued by the manufacturer or the registered importer. As the dealer is not registered, there is no question of issuing any Cenvatable invoice by him . Such dealers as in the past can continue to be un-registered.

(iv) Where goods are sold by the registered importer to an end-user (say a manufacturer) who would avail credit on the basis of importer’s invoice and the goods are transported directly from the port or warehouse at the port to the buyer’s premises, the amendment prescribes that for such movement the factum of such direct transport to the buyer’s premises needs to be recorded in the invoice.

6. It may be noted that the new provisos are meant to improve the ease of doing business by providing an additional facility to the registered dealer or importer for direct dispatch of goods from the manufacturer to the consignee, when he is issuing Cenvatable invoice,. They do not withdraw any past facility. These amendments should therefore be harmoniously interpreted with the existing rules and circulars in conformity with the legal provisions, keeping the intention of the Government in mind. Difficulty faced, if any, should be brought to the notice of the Board. Hindi version would follow.

Shankar Prasad Sarma

Under Secretary to the Government of India

Govt. may find going tough on Bills : 04-05-2015

BJP managers in for rough ride on building consensus.

As the Narendra Modi government prepares to celebrate its first year in office later this month, it has lined up a heavy legislative agenda for Parliament when it resumes on Tuesday after a four-day break.

Eager to flaunt some game-changing reforms, the government is pinning its hopes on getting approval for the Goods and Service Tax (GST) Bill, besides another for tracking black money stashed away abroad.

Other key draft legislation scheduled for consideration and passage before the close of the Budget Session on Friday include the land acquisition Bill, the amendment to the Juvenile Justice (JJ) Act to treat 16-to-18 year-olds as adults in the cases of heinous crimes, and the India-Bangladesh land swap deal.

While the BJP’s floor managers are eager to push through these Bills, all indications suggested a rough ride ahead. More than the time constraint — just four working days — it is the absence of political consensus and a perception in the Opposition of being “bulldozed” that is making floor management an uphill task.

Congress sceptical

Though the GST, land swap with Bangladesh and amendments to the JJ Act are Bills originally drafted by the UPA government, the changes introduced in the first two have made the Congress sceptical. The Land Acquisition Bill — which the Communist Party of India (Marxist) has rechristened the ‘Land Grab Bill’ — is staring at a return to the ordinance route for the third time in five months as opposition to it has only increased since the Lok Sabha passed it in March during the pre-recess part of the Budget Session.

Despite the clear majority the BJP has in the Lok Sabha, as opposed to the fragmented Opposition, the government’s floor managers are being increasingly given a tough time in the Lower House as was evident on April 24 when Union Finance Minister Arun Jaitley sought to move The Constitution (122nd Amendment) Bill to introduce GST even before the Finance and Appropriation Bills were passed. With the Opposition — led by Deputy Speaker M. Thambi Durai — digging its heels in, Speaker Sumitra Mahajan requested Mr. Jaitley to defer it till the Finance and Appropriation Bills were passed.

Source : The Hindu

New income tax return form has lens only on multiple foreign visits : 04-05-2015

NEW DELHI: The tax department is readying the contours of the new income tax returns form which may require only those with overseas personal visits exceeding a certain number to disclose spending details, sparing a majority from making detailed disclosures.

Sources indicated that only those who go beyond six or seven personal visits in a fiscal year will need to file expenditure details in the returns form. Those going on business or official trips won’t have to reveal spending details in the returns form. Those going on business or official trips won’t have to reveal spending details.

The controversial 14-page form released last month had sought details of spending during overseas trips and data on domestic and foreign bank accounts, prompting finance minister Arun Jaitley to order an immediate review.

The revised form, which will be unveiled soon, will require taxpayers to file returns in three or four pages. Only those with income from specific sources, which would come under the lens in normal course, or those required to make certain disclosures would need to go beyond the first few pages, sources said.

The new form released last month had come in for severe criticism as it required individuals to disclose personal spending during overseas trips and data on domestic bank accounts in addition to details of foreign bank accounts, investments in entities abroad as well as information related to interests in trusts. This had prompted finance minister Arun Jaitley to order an immediate review.

Jaitley was then in the US to attend the annual meetings of the World Bank and the International Monetary Fund and the decision had been taken at the official level following a recommendation made by the Special Investigation Team on black money that had been set up by the BJP government following a Supreme Court observation.

The government has already held consultations with industry representatives as well as internally and the minister told Parliament last week that the new forms would be released soon.

“Recently, a controversy did come up. There is an old income tax form of 12 pages which was made 13.5 pages. I was out of the country when it was done. I had it stopped. I am having the entire matter reviewed and very soon you will hear of an extremely simplified procedure coming from us,” he said in Lok Sabha while replying to the debate on the finance bill.

Finance Minister Arun Jaitley’s announcement of MAT exemption on certain incomes of foreign firms was a relief but the government should have clarified on the tax treaty benefits for past dues, tax experts said today.

Replying to a debate on Finance Bill in Parliament, the Minister said all capital gains from sale of securities as well as royalties, interest, technical services fee earned by foreign companies will be exempt from MAT, if the normal tax rate on such income is lower than 18.5 per cent.

Commenting on this, PwC Partner (Tax and Regulatory Services) Suresh Swamy said, “Finance Minister could have clarified that FPIs with treaty benefits would be exempt from paying MAT for past year. That would have given more confidence to foreign investors“.

He said probably clarity on these past tax notices would come after six months when the Supreme Court decides on the case of Mauritius—based Castleton Investment Ltd.

EY Leader (Business Tax) Sunil Kapadia said the foreign investors were looking for certainty and clarity in taxation matters from the Minister.

“The clarification does not provide what happens for taxation of past period. That still remains a controversial area,” Kapadia said.

This issue between foreign investors and government cropped up last year when the tax department started sending notices to FIIs to cough up MAT.

These notices were based on a decision by Authority for Advance Ruling, which directed Castleton to pay MAT in India on their book profits.

So far, the government has sent MAT notices for over Rs. 602 crore to 68 foreign investors.

The amendments to Finance Bill would bring relief to debt funds because interest income of debt funds will also be exempt from MAT from April this year.

Deloitte Haskins & Sells Partner Rajesh Gandhi said the announcement is positive for debt funds as MAT on interest would have been costly for them.

“The government has made it clear that going forward MAT would not be applied on foreign investors. Some clarification on FIIs being able to avail treaty benefits and not be subject to MAT should have been made clear,” Gandhi said.

NEW DELHI, MAY 1: The government is hopeful of getting the GST Constitution Amendment Bill passed in the Lok Sabha next week, paving the way for implementation of the new indirect tax regime from April 2016.

“We are hopeful of getting the GST Bill passed next week,” a top government official said.

The GST Constitution Amendment Bill was introduced in Lok Sabha in December and is likely to be taken up for consideration and passage by the House on Tuesday.

Sources said the Revenue Neutral Rate (RNR) of 27 per cent as proposed by a sub-panel was way too high and needs to be worked.

RNR is the rate at which there will be no revenue loss to the states after GST implementation.

The re-calculation of RNR is necessary as the present rate does not take into account the taxation of petroleum products as also the 1 per cent additional tax which states can levy as part of the GST Bill.

“The GST rate at 27 per cent is outlandish. A final decision on the rate will be taken by the GST Council in June or July,” another official said.

The GST Council will have the Union Finance Minister Arun Jaitley as its Chairman and comprise two-third of its members from states and one-third from the Centre.

The Centre is working towards addressing concerns of all states for rolling out the GST on the scheduled date.

“Almost there is a consensus with all states,” the source added.

Once implemented, GST will be the biggest tax reform since 1947. A single rate GST will replace central excise, state VAT, entertainment tax, octroi, entry tax, luxury tax and purchase tax on goods and services to ensure seamless transfer of goods and services.

Jaitley had last week said in the Lok Sabha that “GST is going to lead to a win-win situation as far as the Centre and states are concerned. It is going to up India’s GDP. It is going to up India’s revenue.”

Seeking to assuage fears of states that they will lose out on revenues once GST is implemented, he said the Centre and states will have concurrent power to levy tax on goods and services.

1. (1) These rules may be called the Companies (Incorporation) Amendment Rules, 2015.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. In the Companies (Incorporation) Rules, 2014,-

(a) rule 5 shall be omitted;

(b) in rule 6, for sub-rule (11), for the words “having paid up share capital of fifty lakhs rupees or less or average annual turnover”, the words “having paid up share capital of fifty lakhs rupees or less and average annual turnover” shall be substituted;

(c) in rule 7, in sub-rule (1), for the words “having paid up share capital of fifty lakhs rupees or less or average annual turnover”, during the relevant period is, the words “having paid up share capital of fifty lakhs rupees or less and average annual turnover during the relevant period” shall be substituted;

(d) after rule 7, the following rules shall be inserted, namely:-

“7A. Penalty.- If a One Person Company or any officer of such company contravenes any of the provisions of these rules, the One Person Company or any officer of the such Company shall be punishable with fine which may extend to five thousand rupees and with a further fine which may extend to five hundred rupees for every day after the first offence during which such contravention continues”;

(e) in rule 8, in sub-rule (2), in clause (b), in sub-clause (xi), in the proviso, after the words and figures “under section 248 of the Act”, the words, figures and brackets “or under section 560 of theCompanies Act, 1956 (1 of 1956)” shall be inserted;

(f) in rule 16, in sub-rule (1), for clause (q), the following shall be substituted, namely:-

“(q) the promoter or first director shall self attest his signature and latest photograph in Form No.INC. 10″.

(g) after rule 35, the following rules shall be inserted namely: -

36. Integrated Process for Incorporation.-(1) For the purpose of simplifying the filing of forms for incorporation of a company, the integrated process shall apply with effect from 01/05/2015.

(2) For the purposes of sub-rule (1), the application for allotment of Director

Identification Number upto three Directors, reservation of a name, incorporation of company and appointment of Directors of the proposed company shall be filed in Integrated Form No. INC-29,for One Person Company, private company, public company and Producer Company, with the Registrar within whose jurisdiction the registered office of the company is proposed to be situated, along with the fee of rupees two thousand in addition to the registration fee as specified inCompanies (Registration of Offices and Fees) Rules, 2014.

(3) For the purposes of filing Integrated Incorporation form, the particulars of maximum of three directors shall be allowed to be filled in INC-29 and allotment of Director Identification Number of maximum of three proposed directors shall be permitted in Form INC-29 in case of proposed directors not having approved Director Identification Number.

(4)The promoter or applicant of the proposed company shall propose only one name in e-form No. INC-29.

(5) The promoter or applicant of the proposed company may prepare Memorandum of Association as per templates in Form INC-30 and may opt for templates of Articles of Association in Form INC-31 in accordance with the provisions of rule 13 for preparation of Memorandum of Association and Article of Association.

(6) The promoter or the applicant shall sign and witness, the Memorandum of Association and Articles of Association in the forms downloaded from the portal of the Ministry of Corporate Affairs and scanned legibly and attach to e-form INC-29 in accordance with the provisions of rule 13 for preparation of Memorandum of Association and Articles of Association.

(7) The facility to file Integrated application for incorporation in Form INC-29 is available as an option to the process for separate applications for allotment of Director Identification Number, reservation of name and Incorporation of a company as provided in these rules.

(8) For an application filed using the Integrated process of incorporation as provided in this rule, the provisions of sub-clause (i) of sub-section (5) of section 4 of the Act and rule 9 of these rules shall not apply.

(9) A company using the provisions of this rule may furnish verification of its registered office undersub-section (2) of section 12 of the Act by filing e-Form INC- 29 in which case the company shall attach along with such e-Form INC-29, any of the documents referred to in sub-rule (2) of rule 25.

(10) The requirement of filing e-form INC-28 may be dispensed with if, the proposed company maintains its registered office at the given correspondence address.

(11) The Registrar within whose jurisdiction the registered office of the company is proposed to be situated shall process INC-29 including application for allotment of Director Identification Number.

(12) (a) Where the Registrar, on examining e-form INC-29, finds that it is necessary to call for further information or finds such application or document to be defective or incomplete in any respect, he shall give intimation to the applicant to remove the defects and re-submit the e-form within fifteen days from the date of such intimation given by the Registrar.

(b) After the resubmission of the document, if the registrar still finds that the document is defective or incomplete in any respect, he shall give one more opportunity of fifteen days to remove such defects or deficiencies.

(c) In case, the Registrar is of the opinion that the document is defective or incomplete in any respect after giving such two opportunities, the e-form INC-29 of the proposed company shall be rejected.

(13) The Certificate of Incorporation shall be issued by the Registrar in Form No. INC-11.

The Ministry of External Affairs has announced “Operation Maitree” under which India has embarked upon massive rescue, relief and evacuation operations in Nepal. A number of organizations/ individuals as a part of their contribution to the relief operations may be required to procure relief items for export to Nepal.

2. In this regard, it is hereby directed that field formations may be instructed to ensure all possible facilitation for expeditious procurement of goods meant for cross border supplies to Nepal from India. All procedural formalities, relating to export of relief items under bond or duty free procurement of relief items for export, may be expeditiously completed in order to facilitate export of relief items to Nepal on an urgent basis and where necessary, temporary orders may be issued by the Chief Commissioner to remove difficulty in complying with the procedures prescribed.

While replying to the discussions on the Finance Bill, 2015 in Lok Sabha today, Finance Minister has announced certain further changes in Central Excise and Customs duty rates. Notifications No.23 toNo.27/2015-Central Excise and notifications No.28 to No.30/2015-Customs, all dated 30th April, 2015have been issued to give effect to these announcements. Notifications No.12 and No.13/2015-Central Excise (N.T.), dated 30th April, 2015 has also been issued in this regard. As regards Service Tax, notification No.12/2015-Service Tax, dated 30.04.2015 has been issued.

2. The changes introduced through these notifications are summarised below. In addition, a clarification regarding applicability of customs duty exemption notifications has also been provided. Unless otherwise stated, all changes in rates of duty take effect from the midnight of 29th April / 30th April, 2015.

2) Basic Customs Duty on Colemanite and other Boron ores has been reduced from 2.5% to Nil.S.No.113 of notification No.12/2012-Customs, dated 17.03.2012 as amended by notification No.28/2015-Customs, dated 30.04.2015 refers. S.No.113A has been omitted since ulexite ore, being a boron ore, will be eligible for Nil duty under S.No.113.

3) Basic Customs Duty on natural rubber (NR) has been increased from 20% or ₹ 30 per kg., whichever is lower, to 25% or ₹ 30 per kg., whichever is lower. S.No.252 of notification No.12/2012-Customs, dated 17.03.2012 as amended by notification No.28/2015-Customs, dated 30.04.2015refers.

7) Exemption from additional duty of customs levied under section 3 of the Customs Tariff Act (both CVD and SAD) in respect of certain entries of notification No.39/96-Customs, dated 23.07.1996 are being withdrawn. Exemption from Basic Customs Duty in respect of these entries, however, would continue. Paragraph 2 of the notification No.39/96-Customs, dated 23.07.1996 as amended bynotification No.29/2015-Customs dated 30.04.2015 refers. Further, exemption from Basic Customs Duty, CVD and SAD in respect of direct imports by the Government of India and the State Governments would continue. Notification No.39/96-Customs, dated 23.07.1996 as amended bynotification No.29/2015-Customs dated 30.04.2015 [amended S. Nos.9 and 10] refer. These changes, however, will be effective from 01.06.2015.

EXCISE:

1) The speed range for ‘jarda scented tobacco’ has been divided into two ranges (as in case of chewing tobacco),

2) Excise duty exemption on finishing agents, dye carriers to accelerate the dyeing or fixing of dye-stuffs, printing paste and other products and preparations of any kind used in the same factory for the manufacture of textiles and textile articles has been withdrawn. S.No.133 of notification No.12/2012-Central Excise, dated 17.03.2012 as omitted by notification No.24/2015-Central Excise, dated 30.04.2015 refers.

1) Rule 3(7)(b) of the CCR, 2004 has been amended so as to allow utilisation of credit of Education Cess and Secondary & Higher Education Cess for payment of basic excise duty in the following situations:

a. Education Cess and Secondary & Higher Education Cess on inputs or capital goods received in the factory of manufacture of final product on or after the 1st day of March, 2015;

b. Balance 50% Education Cess and Secondary & Higher Education Cess on capital goods received in the factory of manufacture of final product in the financial year 2014-15; and

c. Education Cess and Secondary & Higher Education Cess on input services received by the manufacturer of final product on or after the 1st day of March, 2015.

CLARIFICATION: The issue as to whether an importer can simultaneously avail the exemption benefits under two notifications, one for Basic Customs Duty and the other for CVD was examined in the Ministry in the matter of import of coal from Indonesia and vide Circular No.41/2013-Customs dated 21.10.2013 it was clarified that an importer while availing of BCD exemption on steam coal under notification No.46/2011-Customs, dated 01.06.2011 can simultaneously avail of concessional CVD at 2% under S.No.123 of notification No.12/2012-Customs, dated 17.03.2012. Drawing the same analogy, in the case of muriate of potash and urea for use in the manufacture of other fertilizers, it was clarified to the Central Excise zone of Visakhapatnam and Bhubaneswar that importers can simultaneously avail benefit of S.No.198 or 203 of notification No.12/2012-Customs, dated 17.03.2012 for concessional rate of BCD and S.No.127 of notification No.12/2012-Central Excise for CVD exemption. Representations have been received regarding divergence in assessment practice in respect of such imports. It is, therefore, clarified that importers can avail of the benefit ofnotification No.12/2012-Customs, dated 17.03.2012 for the purposes of BCD [i.e. S.No.197 to 203 as amended by notification No.46/2012-Customs, dated 17.08.2012] and simultaneously avail benefit ofS.No.127 of notification No.12/2012-Central Excise, dated 17.03.2012 for the purposes of CVD where such imports are for use in the manufacture of other fertilizers.

SERVICE TAX:

1) Service tax on services of Life Insurance business provided under Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) have been exempted.

2) Service tax on services of Life Insurance business provided under Pradhan Mantri Jan Dhan Yojana (PMJDY) have been exempted.

3) Service tax on services of General Insurance business provided under Pradhan Mantri Suraksha Bima Yojana (PMSBY) have been exempted.

4) Service tax on services by way of collection of contribution under Atal Pension Yojana (APY) have been exempted.

While replying to the discussions on the Finance Bill, 2015 in Lok Sabha today, Finance Minister has announced certain further changes in Central Excise and Customs duty rates. Notifications No.23 toNo.27/2015-Central Excise and notifications No.28 to No.30/2015-Customs, all dated 30th April, 2015have been issued to give effect to these announcements. Notifications No.12 and No.13/2015-Central Excise (N.T.), dated 30th April, 2015 has also been issued in this regard. As regards Service Tax, notification No.12/2015-Service Tax, dated 30.04.2015 has been issued.

2. The changes introduced through these notifications are summarised below. In addition, a clarification regarding applicability of customs duty exemption notifications has also been provided. Unless otherwise stated, all changes in rates of duty take effect from the midnight of 29th April / 30th April, 2015.

2) Basic Customs Duty on Colemanite and other Boron ores has been reduced from 2.5% to Nil.S.No.113 of notification No.12/2012-Customs, dated 17.03.2012 as amended by notification No.28/2015-Customs, dated 30.04.2015 refers. S.No.113A has been omitted since ulexite ore, being a boron ore, will be eligible for Nil duty under S.No.113.

3) Basic Customs Duty on natural rubber (NR) has been increased from 20% or ₹ 30 per kg., whichever is lower, to 25% or ₹ 30 per kg., whichever is lower. S.No.252 of notification No.12/2012-Customs, dated 17.03.2012 as amended by notification No.28/2015-Customs, dated 30.04.2015refers.

7) Exemption from additional duty of customs levied under section 3 of the Customs Tariff Act (both CVD and SAD) in respect of certain entries of notification No.39/96-Customs, dated 23.07.1996 are being withdrawn. Exemption from Basic Customs Duty in respect of these entries, however, would continue. Paragraph 2 of the notification No.39/96-Customs, dated 23.07.1996 as amended bynotification No.29/2015-Customs dated 30.04.2015 refers. Further, exemption from Basic Customs Duty, CVD and SAD in respect of direct imports by the Government of India and the State Governments would continue. Notification No.39/96-Customs, dated 23.07.1996 as amended bynotification No.29/2015-Customs dated 30.04.2015 [amended S. Nos.9 and 10] refer. These changes, however, will be effective from 01.06.2015.

EXCISE:

1) The speed range for ‘jarda scented tobacco’ has been divided into two ranges (as in case of chewing tobacco),

2) Excise duty exemption on finishing agents, dye carriers to accelerate the dyeing or fixing of dye-stuffs, printing paste and other products and preparations of any kind used in the same factory for the manufacture of textiles and textile articles has been withdrawn. S.No.133 of notification No.12/2012-Central Excise, dated 17.03.2012 as omitted by notification No.24/2015-Central Excise, dated 30.04.2015 refers.

1) Rule 3(7)(b) of the CCR, 2004 has been amended so as to allow utilisation of credit of Education Cess and Secondary & Higher Education Cess for payment of basic excise duty in the following situations:

a. Education Cess and Secondary & Higher Education Cess on inputs or capital goods received in the factory of manufacture of final product on or after the 1st day of March, 2015;

b. Balance 50% Education Cess and Secondary & Higher Education Cess on capital goods received in the factory of manufacture of final product in the financial year 2014-15; and

c. Education Cess and Secondary & Higher Education Cess on input services received by the manufacturer of final product on or after the 1st day of March, 2015.

CLARIFICATION: The issue as to whether an importer can simultaneously avail the exemption benefits under two notifications, one for Basic Customs Duty and the other for CVD was examined in the Ministry in the matter of import of coal from Indonesia and vide Circular No.41/2013-Customs dated 21.10.2013 it was clarified that an importer while availing of BCD exemption on steam coal under notification No.46/2011-Customs, dated 01.06.2011 can simultaneously avail of concessional CVD at 2% under S.No.123 of notification No.12/2012-Customs, dated 17.03.2012. Drawing the same analogy, in the case of muriate of potash and urea for use in the manufacture of other fertilizers, it was clarified to the Central Excise zone of Visakhapatnam and Bhubaneswar that importers can simultaneously avail benefit of S.No.198 or 203 of notification No.12/2012-Customs, dated 17.03.2012 for concessional rate of BCD and S.No.127 of notification No.12/2012-Central Excise for CVD exemption. Representations have been received regarding divergence in assessment practice in respect of such imports. It is, therefore, clarified that importers can avail of the benefit ofnotification No.12/2012-Customs, dated 17.03.2012 for the purposes of BCD [i.e. S.No.197 to 203 as amended by notification No.46/2012-Customs, dated 17.08.2012] and simultaneously avail benefit ofS.No.127 of notification No.12/2012-Central Excise, dated 17.03.2012 for the purposes of CVD where such imports are for use in the manufacture of other fertilizers.

SERVICE TAX:

1) Service tax on services of Life Insurance business provided under Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) have been exempted.

2) Service tax on services of Life Insurance business provided under Pradhan Mantri Jan Dhan Yojana (PMJDY) have been exempted.

3) Service tax on services of General Insurance business provided under Pradhan Mantri Suraksha Bima Yojana (PMSBY) have been exempted.

4) Service tax on services by way of collection of contribution under Atal Pension Yojana (APY) have been exempted.

G.S.R.….(E).- In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No.25/2012-Service Tax, dated the 20th June, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 467 (E), dated the 20th June, 2012, namely:-

1. In the said notification,-

(i) in entry 26, after item (o), the following items shall be inserted, namely:-

“(p) Pradhan Mantri Suraksha Bima Yojna;”

(ii) in entry 26A, after item (d), the following items shall be inserted, namely:-

“(e) Pradhan Mantri Jeevan Jyoti Bima Yojana;

(f) Pradhan Mantri Jan Dhan Yogana;”;

(iii) after entry 26A, the following entry shall be inserted, namely:-

“26B Services by way of collection of contribution under Atal Pension Yojana (APY).”

Modi govt takes the lead in labour reforms : 30-04-2015

As industry presses for labour reforms, the National Democratic Alliance government has proposed allowing companies hiring up to 300 workers to lay them off without seeking official sanction. Currently, industries with up to 100 workers were allowed to do this.

The Centre is following the Rajasthan government, which had made a similar change to its labour laws five months ago.

The Union labour ministry will integrate three laws — the Trade Unions Act, the Industrial Disputes Act and the Industrial Employment (Standing Orders) Act — into a single code for industrial relations.

The notice period for establishments to fire employees or shut down a unit is proposed to be increased to three months from one month now.

Retrenched workers are to be paid an average salary of 45 days, instead of the 15 days at present. A worker will be allowed to object to being laid off within three years, against no clear period specified in the law now.

The proposals are designed to make hiring flexible and bring more workers under labour legislation.

“We are re-examining the labour laws on two aspects — strengthening the social security net of the labours and ensuring compliance be such that no employer is harassed,” Union Labour Secretary Shankar Aggarwal told Business Standard.

Aggarwal said in the name of compliance, because of stringent labour laws, small and big establishments were not able to set up factories in India and there was a lack of flexibility.

The ministry has invited comments on its proposals by May 26. It will hold consultations with trade unions and industry before sending the proposals for Cabinet approval.

Only employees will be allowed to form unions. In the unorganised sector, two officials from outside can become members of a union.

“Politicisation of unions will be significantly restricted. This will also maintain genuine representation of workers,” said a labour ministry official who did not wish to be named.

During conciliatory proceedings, workers in all industrial sectors will not be permitted to go on a strike. The ministry has proposed scrapping various arbitration forums, including the labour court. “The industrial tribunal will continue, but the labour court, the board of arbitration and the tribunal court will cease to exist,” the official said.

Further, strikes will not be allowed without a six-week notice. Now, only workers at public utilities need to provide such a notice to employers.

Mass casual leave will be considered a strike. The proposal says if more than half the workers are on casual leave, it will be treated a strike.

“This will reduce harassment of employers because workers tend to go on casual leave and not call it a strike,” the official added.

Source : PTI

Economy no longer about controls: Jaitley : 30-04-2015

NEW DELHI, APRIL 30: The economy is no longer the economy of controls, said Finance Minister Arun Jailtey.

He said civil servants must understand the policies of the Government but distance themselves from political thinking.

Attention of Authorised Dealer Category-I (AD Category-I) banks is invited to A.P. (DIR Series) Circular No. 115 dated March 28, 2014. In terms of the revised merchanting trade guidelines stipulated therein, for a trade to be classified as merchanting trade, goods acquired should not enter the Domestic Tariff Area and the state of the goods should not undergo any transformation. Further, the goods involved in the merchanting trade transaction would be the ones that are permitted for exports / imports under the prevailing Foreign Trade Policy (FTP) of India, as on the date of shipment and all the rules, regulations and directions applicable to exports (except Export Declaration Form) and imports (except Bill of Entry), should be complied with for the export leg and the import leg respectively.

2. As Nepal and Bhutan are landlocked countries, there is a facility of transit trade whereby goods are imported from third countries by Nepal and Bhutan through India under the cover of Customs Transit Declarations in terms of the Government of India Treaty of Transit with these two countries. In consultation with Government of India, it is clarified herein that goods consigned to the importers of Nepal and Bhutan from third countries under merchanting trade from India would qualify as traffic-in-transit, if the goods are otherwise compliant with the provisions of the India-Nepal Treaty of Transit and Indo-Bhutan Treaty of Transit respectively.

3. AD Category-I banks may bring the contents of this circular to the notice of their constituents concerned.

4. The directions contained in this circular have been issued under sections 10(4) and 11(1) of theForeign Exchange Management Act (FEMA), 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Deferred Payment Protocols dated April 30, 1981 and December 23, 1985 between Government of India and erstwhile USSR

Attention of Authorised Dealer Category-I (AD Category-I) banks is invited to A.P. (DIR Series) Circular No. 29 dated September 12, 2014 wherein the Rupee value of the Special Currency Basket was indicated as ₹ 80.580297 effective from September 09, 2014.

2. AD Category-I banks are advised that a further revision has taken place on April 10, 2015 and accordingly, the Rupee value of the Special Currency Basket has been fixed at ₹ 85.4813 with effect from April 16, 2015.

3. AD Category-I banks may bring the contents of this Circular to the notice of their constituents concerned.

4. The Directions contained in this circular have been issued under sections 10(4) and 11(1) of theForeign Exchange Management Act (FEMA), 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

G.S.R. (E).- In exercise of the powers conferred by sub-section (1) and sub-section (2A) of section 5A of the Central Excise Act, 1944 (1 of 1944), read with sections 136 and 138 of the Finance Act, 2007 (22 of 2007), the Central Government being satisfied that it is necessary in the public interest so to do, hereby makes the following amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No.15/2015-Central Excise, dated the 1st March, 2015, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 145(E), dated the 1st March, 2015, namely:-

In the said notification, after the paragraph, the following Explanation shall be inserted, namely:-

“Explanation.- The exemption contained in this notification shall apply to excisable goods which are produced or manufactured by a hundred per cent. export oriented unit and brought to any other place in India in accordance with the provisions of Foreign Trade Policy.”.

G.S.R. (E).- In exercise of the powers conferred by sub-section (1) and sub-section (2A) of section 5A of the Central Excise Act, 1944 (1 of 1944), read with sections 91 and 93 of the Finance (No.2) Act, 2004 (23 of 2004), the Central Government being satisfied that it is necessary in the public interest so to do, hereby makes the following amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No.14/2015-Central Excise, dated the 1st March, 2015, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 144(E), dated the 1st March, 2015, namely:-

In the said notification, after the paragraph, the following Explanation shall be inserted, namely:-

“Explanation.- The exemption contained in this notification shall apply to excisable goods which are produced or manufactured by a hundred per cent. export oriented unit and brought to any other place in India in accordance with the provisions of Foreign Trade Policy.”.

G.S.R. (E).- In exercise of the powers conferred by sub-section (3) of section 3A of the Central Excise Act, 1944 (1 of 1944), the Central Government hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 16/2010-Central Excise, dated the 27th February, 2010, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 118 (E), dated the 27th February, 2010, namely :-

In the said notification, in the first paragraph,-

(i) for the portion beginning with the words “having maximum speed” and ending with the words, brackets, figures and letter “or column (4b) of Table-2”, the words, brackets, figures and letters “having maximum packing speed as specified in column (3) or column (4) or column (5) of Table-1 or column (3) or column (4) or column (5) of Table-2, as the case may be, at which they can be operated for packing of specified goods which are packed in pouches of retail sale prices as specified in column (2) of Table-1 or Table-2, as the case may be, the rates of duty specified in the corresponding entry in column (3a) or column (3b) or column (4a) or column (4b) or column (5) of the said Table-1 or column (3) or column (4) or column (5a) or column (5b) of the said Table-2”, shall be substituted;

(ii) for Table-2 and the Illustration thereto, the following shall be substituted, namely :-

“TABLE-2

S.No.

Retail sale price (per pouch)

Rate of Duty per packing machine per month (rupees in lakh)

Jarda Scented Tobacco

Unmanufactured Tobacco

Upto 300 pouches per minute

301 pouches per minute and above

Any speed

(1)

(2)

(3)

(4)

(5)

Without lime tube/lime pouches

With lime tube/lime pouches

(5a)

(5b)

1

Up to Re.1.00

27.05

82.11

13.30

12.63

2

Exceeding Re.1.00 but not exceeding ₹ 1.50

40.57

123.16

19.95

18.95

3

Exceeding ₹ 1.50 but not exceeding ₹ 2.00

48.68

147.79

23.94

22.61

4

Exceeding ₹ 2.00 but not exceeding ₹ 3.00

73.03

221.69

35.91

33.91

5

Exceeding ₹ 3.00 but not exceeding ₹ 4.00

90.88

275.88

44.68

42.02

6

Exceeding ₹ 4.00 but not exceeding ₹ 5.00

113.60

344.84

55.85

52.53

7

Exceeding ₹ 5.00 but not exceeding ₹ 6.00

136.32

413.81

67.03

63.04

8

Exceeding ₹ 6.00 but not exceeding ₹ 7.00

216.37

656.85

106.39

99.74

9

Exceeding ₹ 7.00 but not exceeding ₹ 8.00

216.37

656.85

106.39

99.74

10

Exceeding ₹ 8.00 but not exceeding ₹ 9.00

216.37

656.85

106.39

99.74

11

Exceeding ₹ 9.00 but not exceeding ₹ 10.00

216.37

656.85

106.39

99.74

12

Exceeding ₹ 10.00 but not exceeding ₹ 15.00

305.09

926.15

150.01

142.51

13

Exceeding ₹ 15.00 but not exceeding ₹ 20.00

382.37

1160.78

188.01

178.61

14

Exceeding ₹ 20.00 but not exceeding ₹ 25.00

449.29

1363.92

220.91

209.87

15

Exceeding ₹ 25.00 but not exceeding ₹ 30.00

506.80

1538.50

249.19

236.73

16

Exceeding ₹ 30.00 but not exceeding ₹ 35.00

555.79

1687.22

273.28

259.61

17

Exceeding ₹ 35.00 but not exceeding ₹ 40.00

597.08

1812.56

293.58

278.90

18

Exceeding ₹ 40.00 but not exceeding ₹ 45.00

631.41

1916.78

310.46

294.94

19

Exceeding ₹ 45.00 but not exceeding ₹ 50.00

659.47

2001.97

324.26

308.05

20

Above ₹ 50.00

659.47+13.19 x (P-50)

2001.97+40.04 x (P-50)

324.26+6.49
x (P-50)

308.05+6.16
x (P-50)

where ‘P’ above represents retail sale price of the pouch for which rate of duty is to be determined.”;

Illustration: – The rate of duty per packing machine per month for a jarda scented tobacco pouch having retail sale price of ₹ 55.00 (i.e. „P‟) packed with the aid of a machine having maximum packing speed, at which it can be operated for packing jarda scented tobacco pouch of the said retail sale price, of 250 pouches per minute, shall be =Rs. 659.47+13.19 x (55-50) lakh = ₹ 725.42 lakh.”.

Amendments to companies law okayed by cabinet : 30-04-2015

The cabinet on Wednesday approved amendments to companies law that seek to bring it in conformity with the rules that go beyond the provisions of the act.

The new Companies Act, passed in 2014, had put many restrictions on companies and left out many issues pertaining to ease of doing business that were later addressed through rules.

The amendments seek to bring the act and the rules in conformity, partner at Economic Laws Practice Darshan Upadhyay said.

“The amendments seek to rationalise the procedure for laying draft notifications granting exemptions to various classes of companies or modifying provisions of the act in Parliament to ensure speedier issue of final notifications,” a statement after the cabinet meeting said.

The amendments are also likely to bring the Companies Act and rules of Sebi that apply to listed companies at par. In some cases Sebi provisions are more stringent while in others compliance with Companies Act is tougher.

The amendments could also restore the difference between public and private companies in terms of compliance as it was in the Companies Act of 1956 that was superceded by the new act. In the new act both private and public companies are treated equally.

The new law had earlier barred companies from extending loans to subsidiaries or to other firms where directors have an interest. The rules under the act, however, allowed them to provide loans or guarantees to wholly owned subsidiaries. The amendments could make these rules part of the act.

G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 12/2012-Central Excise, dated the 17th March, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 163(E), dated the 17th March, 2012, namely:-

In the said notification, in the Table,-

(i) Sl. No. 133 and the entries relating thereto shall be omitted;

(ii) against Sl. No. 255, -

(a) in column (3), for the words and figures “The following goods, namely:-”, the words and figures “The following goods for use in manufacture of computer falling under the heading 8471, namely:-” shall be substituted;

G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944) read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby directs that each of the notifications of the Government of India in the Ministry of Finance (Department of Revenue), specified in column (2) of the Table hereto annexed shall be further amended, in the manner specified in the corresponding entry in column (3) of the said Table, namely :-

2. The principal notification No. 63/95-Central Excise, dated the 16th March, 1995 was published in the Gazette of India, Extraordinary, vide number G.S.R.255(E), dated the 16th March, 1995, and was last amended by notification No. 29/2011-Central Excise, dated the 24th March, 2011 published vide number G.S.R. 241(E), dated the 24th March, 2011.

G.S.R (E). - In exercise of the powers conferred by sub-sections (2) and (3) of section 3A of theCentral Excise Act, 1944 (1 of 1944), the Central Government hereby makes the following rules further to amend the Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty ) Rules, 2010, namely :-

1. (1) These rules may be called the Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Amendment Rules, 2015.

(2) They shall come into force on the date of their publication in the Official Gazette.

(a) for the portion beginning with the words “The quantity of notified goods” and ending with the words “or column (4b) of the said Table-2, as the case may be”, the following shall be substituted, namely:-

“The quantity of notified goods, having retail sale prices as specified in column (2) of Table-1 or Table-2 below, deemed to be produced by use of one operating packing machine, having maximum packing speed at which it can be operated for packing of notified goods as specified in column (3) or column (4) or column (5) of the said Table-1, or column (3) or column (4) or column (5) of the said Table-2, as the case may be, per month shall be as is equal to the corresponding entry specified in column (3a) or column (3b) or column (4a) or column (4b) or column (5) of the said Table-1, or column (3) or column (4) or column (5a) or column (5b) of the said Table-2, as the case may be”;

(b) for the Table-2 and the entries relating thereto, the following shall be substituted, namely:-

“TABLE-2

S.No.

Retail sale price (per pouch)

Capacity of production per packing machine per month for Jarda Scented Tobacco and Unmanufactured Tobacco (number of pouches)

Jarda Scented Tobacco

Unmanufactured Tobacco

Upto 300 pouches per minute

301 pouches per minute and above

Any speed

(1)

(2)

(3)

(4)

(5)

Without lime tube/lime pouches

With lime tube/lime pouches

(5a)

(5b)

1

Up to Re.1.00

6988800

21216000

4992000

4742400

2

Exceeding Re.1.00 but not exceeding ₹ 1.50

6988800

21216000

4992000

4742400

3

Exceeding ₹ 1.50 but not exceeding ₹ 2.00

6289920

19094400

4492800

4243200

4

Exceeding ₹ 2.00 but not exceeding ₹ 3.00

6289920

19094400

4492800

4243200

5

Exceeding ₹ 3.00 but not exceeding ₹ 4.00

5870592

17821440

4193280

3943680

6

Exceeding ₹ 4.00 but not exceeding ₹ 5.00

5870592

17821440

4193280

3943680

7

Exceeding ₹ 5.00 but not exceeding ₹ 6.00

5870592

17821440

4193280

3943680

8

Exceeding ₹ 6.00 but not exceeding ₹ 7.00

5591040

16972800

3993600

3744000

9

Exceeding ₹ 7.00 but not exceeding ₹ 8.00

5591040

16972800

3993600

3744000

10

Exceeding ₹ 8.00 but not exceeding ₹ 9.00

5591040

16972800

3993600

3744000

11

Exceeding ₹ 9.00 but not exceeding ₹ 10.00

5591040

16972800

3993600

3744000

12

Exceeding ₹ 10.00 but not exceeding ₹ 15.00

5255578

15954432

3753984

3566285

13

Exceeding ₹ 15.00 but not exceeding ₹ 20.00

4940243

14997166

3528745

3352308

14

Exceeding ₹ 20.00 but not exceeding ₹ 25.00

4643828

14097336

3317020

3151169

15

Exceeding ₹ 25.00 but not exceeding ₹ 30.00

4365199

13251496

3117999

2962099

16

Exceeding ₹ 30.00 but not exceeding ₹ 35.00

4103287

12456406

2930919

2784373

17

Exceeding ₹ 35.00 but not exceeding ₹ 40.00

3857090

11709022

2755064

2617311

18

Exceeding ₹ 40.00 but not exceeding ₹ 45.00

3625664

11006481

2589760

2460272

19

Exceeding ₹ 45.00 but not exceeding ₹ 50.00

3408124

10346092

2434375

2312656

20

Above ₹ 50.00

3408124

10346092

2434375

2312656″ ;

(iii) in rule 6, in sub-rule (3), after the fourth proviso, the following proviso shall be inserted, namely:-

“Provided also that the annual capacity of production for the 30th day of April, 2015 shall be calculated on pro-rata basis based on the total number of days in the month of April, 2015.”

[F No.334//2015-TRU]

(Pramod Kumar)
Under Secretary to the Government of India

Note.- The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), dated the 27th February, 2010 by notification No.11/2010-Central Excise (N.T.), dated the 27th February, 2010, vide number G.S.R.127 (E), dated the 27th February, 2010 and were last amended by notification No.4/2015-Central Excise (N.T.), dated the 1st March, 2015, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-Section (i), vide number G.S.R.179 (E), dated the 1st March, 2015.

G.S.R. (E).- In exercise of the powers conferred by section 37 of the Central Excise Act, 1944 (1 of 1944) and section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules further to amend the CENVAT Credit Rules, 2004, namely:-

1. (1) These rules may be called the CENVAT Credit (Second Amendment) Rules, 2015.

(2) They shall come into force from the date of their publication in the Official Gazette.

2. In the CENVAT Credit Rules, 2004 (hereinafter referred to as the said rules), in rule 3, in sub-rule (7), in clause (b), after the second proviso, the following shall be substituted, namely:-

“Provided also that the credit of Education Cess and Secondary and Higher Education Cess paid on inputs or capital goods received in the factory of manufacture of final product on or after the 1st day of March, 2015 can be utilized for payment of the duty of excise leviable under the First Schedule to the Excise Tariff Act:

Provided also that the credit of balance fifty per cent. Education Cess and Secondary and Higher Education Cess paid on capital goods received in the factory of manufacture of final product in the financial year 2014-15 can be utilized for payment of the duty of excise specified in the First Schedule to the Excise Tariff Act:

Provided also that the credit of Education Cess and Secondary and Higher Education Cess paid on input services received by the manufacturer of final product on or after the 1st day of March, 2015 can be utilized for payment of the duty of excise specified in the First Schedule to the Excise Tariff Act.”.

Notification No. : S.O. 1218 (E) Dated: 29-4-2015

De-notification of certain area from sector specific Special Economic Zone for Engineering at village Alwa and Pipalia, Taluka Waghodia, District Vadodara in the State of Gujarat. – S.O. 1218 (E) – Dated 29-4-2015 – Special Economic Zone

MINISTRY OF COMMERCE AND INDUSTRY

(Department of Commerce)

NOTIFICATION

New Delhi, the 29th April, 2015

S.O. 1218 (E). – Whereas, M/s Aspen Infrastructures Ltd., a private organization in the State of Gujarat, has proposed under section 3 of the Special Economic Zones Act, 2005 (28 of 2005), (hereinafter referred to as the said Act) to set up a sector specific Special Economic Zone for Engineering at village Alwa and Pipalia, Taluka Waghodia, District Vadodara in the State of Gujarat;

And, whereas, the Central Government, in exercise of the powers conferred by sub-section (1) of section 4 of the said Act read with rule 8 of the Special Economic Zone Rules 2006, had notified the following areas as Special Economic Zone, as per the details given below:-

S. No.

Notification No.

Date

Area Notified(in hectare)

Resultant Area(in hectare)

1.

S.O. 1084(E)

03.07.2007

100.99.00

100.99.00

2.

S.O. 1669(E)

11.07.2008

9.67.61

110.66.61

3.

S.O. 1366(E)

27.05.2009

4.97.78

115.64.39

And, Whereas, the Central Government, in exercise of the powers conferred by sub-section (1) of section 4 of the said Act read with rule 8 of the Special Economic Zone Rules 2006, had de-notified the following areas as Special Economic Zone, as per the details given below:-

S. No.

Notification No.

Date

Area De-notified(in hectare)

Resultant Area(in hectare)

1.

S.O. 2001(E)

04.08.2014

10.42.41

105.21.98

2.

S.O. 2505(E)

27.09.2014

52.45.88

52.76.10

And, Whereas, M/s Aspen Infrastructures Ltd. has now proposed to de-notify 1.21.30 hectares of the above Special Economic Zone;

And, Whereas, the State Government of Gujarat has given its “No Objection” to the proposal vide letter No. IC/Infra/SEZ-Cell/1045772 dated 24th February, 2015;

And Whereas, the Development Commissioner, Kandla Special Economic Zone has recommended the proposal for de-notification of an area of 1.21.30 hectares of the Special Economic Zone;

And, Whereas, the Central Government is satisfied that the requirements under sub-section (8) of Section 3 of the said Act and other related requirements are fulfilled;

Now, Therefore, in exercise of the powers conferred by second proviso to sub-section (1) of section 4of the Special Economic Zones Act, 2005 and in pursuance of rule 8 of the Special Economic Zones Rules, 2006, the Central Government hereby de-notifies an area of 1.21.30 hectares, thereby making resultant area as 51.54.80 hectare, comprising the survey numbers and the area given below in the table, namely:-

G.S.R. 333(E).- In exercise of the powers conferred by sub-section (1) of Section 67 of the Limited Liability Partnership Act, 2008 (6 of 2009), the Central Government hereby directs that the provisions of section 458 of the Companies Act, 2013 (18 of 2013), [except proviso to subsection (1)] shall apply to a limited liability partnership from the date of publication of this notification in the Official Gazette.

[F. No. 1/2/2013-CL-V]

AMARDEEP SINGH BHATIA, Jt. Secy.

Why has ST refund mechanism failed so miserably? : 28-04-2015

By S Sivakumar, LL.B., FCA, FCS, MBA, ACSI, Advocate

THIS is indeed a billion dollar question, literally. One had hopes that the new Government would take some effective steps to ensure the flow of refunds to exporters. Sadly, in the last two Budgets, the woes of the exporters in terms of refunds have been totally ignored with the result that the refund mechanism has gone from bad to worse.

I have been handling issues related to refund claims of my clients over the last few years. Sadly enough, I have seen no improvement in the manner the Department handles refund claims of exporters. In facts, things would seem to have gone really bad in the recent months following the re-structuring of the service tax department and in many cases, the refund related files have been misplaced with the refund claimants being asked to re-submit claims. Following the restructuring, the Assistant and Deputy Commissioners who are vested with powers to handle refund claims also feign ignorance as to their jurisdiction to handle cases as the entire Department seems to be in a mess.

In many cases, show cause notices have not been issued on the quarterly refund claims filed for years now. Even in cases where show cause notices have been issued, the Assistant and Deputy Commissioners who are required to call for personal hearings are happily sitting on the these files (I mean this in a literal sense as it is understood that, these officers would find it more comfortable to use these files as chairs, in the absence of furniture being made available to them) for months and years together. In very few cases where personal hearings have been conducted, the officers are not willing to pass adjudication orders. In many instances, tens of box files containing important documents related to refund claims are claimed to be untraceable.

At the level of the First Appellate Authorities, there would seem to be a general reluctance on the part of the Appellate Commissioners to handle appeals involving refund claims as there is a marked preference for handling appeals related to adjudication of tax. In many cases, where the appeal cases have been reverted (the Appellate Commissioners are smart enough not to use the prohibited word ‘remand’), it is seen that the Assistant and the Deputy Commissioners sit on these cases for months and years together. Even in exceptional cases where a Departmental Officer would have granted a refund, it is often seen that the Department goes on appeals against these orders, to the CESTAT.

The very adjudication process followed by the offices of the Service Tax Department vary from one Commissionerate to another. There is an absolute lack of uniformity in the manner refund claims are handled by the Service tax Commissionerates. Recently a services exporter with delivery offices in multiple cities was seen complaining that the Service Tax Commissionerates located at different cities are treating his claim on service tax refunds, differently. I was informed that the Service Tax Commissionerate of the IT capital was refusing even to consider that the rent paid for the premises from where the software services was exported was an ‘input service’ while he had no such issues in the Commissionerate of the country’s commercial capital.

Handling the very process of applying for a refund could be one of the most depressing and demoralizing experiences for an exporter and especially, a services exporter. At least, the goods exporter would already have acclimatized himself to the ways of the Central Excise Department. The services exporter, on the other hand, finds it too scary to receive a ‘show cause notice’ asking him to explain the nexus between the input service involving payment of rent for his premises from which exports of output service are undertaken and threatening him that any further action can be taken under the law. Most small time services exporters find it prudent not to needle the Central Government for being daring enough to find a refund claim.

The requirements of the Service Tax Department for processing a refund claim could be endless, as we know. Apart from getting certificates from the service providers that they have remitted the service tax collected from the exporter, the hapless exporter would be required to produce multiple reconciliation statements involving the export invoices, softex forms, inward remittance certificates, bank realization certificates, etc. In some cases, the Department also wants the exporter to confirm that his client has indeed received the services. I recently came across a requirement asking the exporter to justify as to why his refund claim for a particular quarter was above a certain percentage of his export turnover.

When asked to justify the ‘nexus’ between the input service being rent paid for the premises and the output services, I was informed by my Departmental friend, of the audacity of the refund claimant who had replied to the SCN that, without the premises, his staff would be forced to sit on the road outside the Service Department’s office in Bangalore and try and undertake software programming so that, the very efficient direct IRS recruit of the Department who wanted the exporter to prove the nexus could convince himself that it is not possible for the exporter to render output services without the safety and security of a building.

Be that as it may…….it is sad to note that even the brilliant direct recruits of the Department are not inclined to take a risk, insofar as the granting of refunds to exporters are concerned. It is a sad reflection that our brilliant civil servants are forced to use their intellectual prowess to be used in a highly negative rather than, in a positive manner, in the matter of handling refund claims. No amount of prodding by the Finance Ministry is going to work, vis-à-vis our great Babus, unless the various systemic issues are solved. One of my friends at the level of the Commissioner told me that though he was convinced that a particular services exporter who was claiming a huge amount as refund of service tax was entitled to the refund, he did not want to take a risk of having the CBI to knock at his doors given the quantum of the refund.

I would presume that the Government would be sitting on tens of thousands of crores of service tax refunds, for sure. While I am one of the few who would still want to believe that the current political dispensation would ultimately prove to be better than its predecessor, it does seems that the current Government has no interest whatsoever in ensuring that the refund mechanism works, if the complete lack of action on its part, on this front, is any proof.

Before parting…

One could easily have given up hope of a positive change in our indirect tax bureaucracy, with particular reference to the processing of refund claims involving service tax. This state of affairs is in complete contrast to the very efficient system involving processing of refunds by the Income tax Department, where, the refunds claims based on income tax returns are handled by a computer system.

Perhaps, it is time for a complete rethink on the current system…. we need to introduce a system which can grant refunds, as a percentage of the export realizations. Though the new Foreign Trade Policy has introduced a similar system for services exporters, sadly enough, this is not applicable to services exporters operating as 100% EOUs and SEZ units who constitute the bulk of the services exports from India. And, like under the income tax law, there should be a system of interest to be paid for the delay, to be calculated from the date of filing of the refund claims.

If the exporters have got some relief in terms of refunds, it is undoubtedly because of the judicial bodies like the Courts and the CESTAT Benches.

In the longer run the fact that the service tax refund system is so non-operational to be of any practical use to the exporter it is bound to negatively affect new investments in the country under the Make-In-India/Made-In-India initiative.

The PM had very recently talked of a political intervention in bureaucracy to make it more accountable, responsible and transparent. This intervention is very urgently required in our indirect tax bureaucracy.

On the flip side…..the largest beneficiaries of the current system involving the filing of refund claims on a quarterly basis are, of course, the CAs and Advocates (like me). We have a good time in handling litigation arising out of each and every quarterly refund claim filed by our clients, the hapless exporters.

Sub: Clarification on rebate of duty on goods cleared from DTA to SEZ – reg.

Kind attention is invited to Notifications No. 6/2015-CE (NT) and 8/2015-CE (NT), both dated 01.03.2015, vide which the meaning of export has been elaborated in both rule 5 of CENVAT Credit Rules, 2004 and rule 18 of Central Excise Rules, 2002. Post these amendments, apprehensions have been expressed by the trade as to whether the following benefits would be available after these amendments:

i. Benefit of rebate of duty on goods cleared from DTA to SEZ.

ii. Refund of accumulated CENVAT credit when goods are cleared from DTA to SEZ.

2. It is seen that:

i. Section 2 (m) (ii) of the SEZ Act, 2005 defines export to, inter-alia, mean “supplying goods, or providing services, from the Domestic Tariff Area to a Unit or Developer”.

ii. Section 26 (1) (d) of SEZ Act, 2005 mentions that subject to the provisions of the sub-section (2), every Developer and entrepreneur shall be entitled to drawback or such other benefits as may be admissible from time to time on goods brought or services provided from the Domestic Tariff Area into Special Economic Zone or Unit or services provided in a Special Economic Zone or Unit by the service providers located outside India to carry on the authorized operations by the Developer or entrepreneur.

iii. Section 51 (1) of the SEZ Act mandates that “The Provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act”.

iv. Section 53 (1) of the SEZ Act mentions that “A Special Economic Zone shall, on and from the appointed day, be deemed to be a territory outside the customs territory of India for the purposes of undertaking the authorized operations”.

v. Rule 30 (1) of the SEZ Rules, 2006 reads as under-

“The Domestic Tariff Area supplier supplying goods to a Unit or Developer shall clear the goods, as in the case of exports, either under bond or as duty paid goods under claim of rebate on the cover of ARE-1 referred to in Notification number 42/2001-Central Excise (NT) dated the 26th June, 2001 in quintuplicate bearing running serial number beginning from the first day of the financial year”.

3. It can thus be seen that according to the SEZ Act, supply of goods from DTA to the SEZ constitutes export. Further, as per section 51 of the SEZ Act, the provisions of the SEZ Act shall have over riding effect over provisions of any other law in case of any inconsistency. Section 53 of the SEZ Act makes an SEZ a territory outside the customs territory of India. It is in line of these provisions that rule 30 (1) of the SEZ rules, 2006 provides that the DTA supplier supplying goods to the SEZ shall clear the goods either under bond or as duty paid goods under claim of rebate on the cover of ARE-1.

4. It was in view of these provisions that the DGEP vide circulars No. 29/2006-customs dated 27/12/2006 and No. 6/2010 dated 19/03/2010 clarified that rebate under rule 18 of the Central Excise Rules, 2002 is admissible for supply of goods made from DTA to SEZ. The position as explained in there circulars does not change after amendments made vide Notification No. 6/2015-CE (NT) and 8/2015-CE (NT) both dated 01.03.2015, since the definition of export, already given in rule 18 of Central Excise Rules, 2002 has only been made more explicit by incorporating the definition of export as given in the Customs Act, 1962. Since SEZ is deemed to be outside the Customs territory of India, any licit clearances of goods to an SEZ from the DTA will continue to be export and therefore be entitled to the benefit of rebate under rule 18 of CER, 2002 and of refund of accumulated CENVAT credit under rule 5 of CCR, 2004, as the case may be.

5. Any difficulty in the implementation of this circular may be brought to the notice of the Board. Hindi version will follow.

S. O. …. (E) - It is hereby notified for general information that the organization Pandit Deendayal Petroleum University Raisan Gandhi Nagar Gujarat, (PAN- AABTP3856A) has been approved by the Central Government for the purpose of clause (ii) of sub-section (1) of section 35 of the Income-tax Act 1961 (said Act), read with rules 5C and 5E of the Income-tax Rules, 1962 (said Rules), from AY- 2014-2015 and onwards under the category ‘University. College or Other Institution’, for the Departments/schools under its aegis which are engaged in scientific research activities only, subject to the following conditions, namely:-

(i) The sums paid to the approved organization shall be utilized for scientific research;

(ii) The approved organization shall carry out scientific research in the above fields through its faculty members or its enrolled students;

(iii) The approved organization shall maintain separate books of account in respect of the sums received by it for scientific research, reflect therein the amounts used for carrying out research, get such books audited by an accountant as defined in the explanation to sub-section (2) of section 288 of the said Act and furnish the report of such audit duly signed and verified by such accountant to the Commissioner of Income-tax or the Director of Income-tax having jurisdiction over the case, by the due date of furnishing the return of income under sub-section (1) of section 139 of the said Act;

(iv) The approved organization shall maintain a separate statement of donations received and amounts applied for scientific research in respect of concerned Departments and a copy of such statement duly certified by the auditor shall accompany the report of audit referred to above.

2. The Central Government shall withdraw the approval if the approved organization:-

(a) fails to maintain separate books of account referred to in sub-paragraph (iii) of paragraph 1; or

(b) fails to furnish its audit report referred to in sub-paragraph (iii) of paragraph 1; or

(c) fails to furnish its statement of the donations received and sums applied for scientific research referred to in sub-paragraph (iv) of paragraph 1; or

(d) ceases to carry on its research activities or its research activities are not found to be genuine; or

(e) ceases to conform to and comply with the provisions of clause (ii) of sub-section (1) of section 35 of the said Act read with rules 5C and 5E of the said Rules.

It has come to the notice of the Board that several Foreign Institutional Investors receiving income from transactions in securities claim such income as exempt from tax under the Income Tax Act, 1961(‘the Act’) by availing benefit provided in the Double Taxation Avoidance Agreements(‘DTAAs’) signed between India and their respective countries of residence.

2. Since the issue involved in such cases is limited, such claims should be decided expeditiously. Accordingly, it has been decided that in all cases of Foreign Institutional Investors seeking treaty benefits under the provisions of respective DTAAs, decision may be taken on such claims within one month from the date such claim is filed.

3. This may be brought to the notice of all concerned for strict compliance.

Yours faithfully,

(Dinesh Antil)

Dy. Commissioner of Income-tax(OSD)

[FT & TR-I(2)]

Copy to:

1. Chairperson, Members and all other officers in CBDT of the rank of Under Secretary and above

2. Database Cell for uploading on IRS Officers website

3. Media Coordinator and Official Spokesperson for CBDT

4. Guard File

No. 07/2015 Dated: 23-4-2015

Requirement of tax deduction at source in case of corporations whose income is exempt under section 10 (26BBB) of the Income-tax Act, 1961- Exemption thereof. – Circular – Dated 23-4-2015 – Income Tax

Circular No. 07/2015

F. No. 275/50/2006 IT (B)

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

North Block, New Delhi

23 April, 2015

Subject: Requirement of tax deduction at source in case of corporations whose income is exempt under section 10 (26BBB) of the Income-tax Act, 1961- Exemption thereof.

The Central Board of Direct Taxes (the Board) had earlier issued Circular No. 4/2002 dated 16.07.2002 which laid down that in case of such entities, whose income is unconditionally exempt under section 10 of the Income-tax Act (the Act) and who are statutorily not required to file return of income as per section 139 of the Act, there would be no requirement for tax deduction at source (TDS) from the payments made to them since their income is anyway exempt under the Act.

2. Section 10(26BBB) came into existence after the issue of the said Circular dated 16.07.2002. The said section was inserted in the Income-tax Act vide Finance Act, 2003 (w.e.f. 01.04.2004) unconditionally exempting any income of a corporation established by a Central, State or Provincial Act for the welfare and economic upliftment of ex-servicemen being the citizens of India. The corporations covered under section 10(26BBB) are also statutorily not required to file return of income as per section 139 of the Act. References have been received in the Board requesting for extension of the aforesaid exemption from TDS granted vide Circular No.4/2002 to the corporations covered under section 10(26BBB) as well.

3. The matter has been examined by the Board. It has now been decided that since the corporations covered under section 10(26BBB) satisfy the two conditions of Circular No.4/2002 i.e. unconditional exemption of income under section 10 and no statutory liability to file return bf income sunder section 139, any corporation whose income is exempt under section 10 (26BBB) of the Act will also be entitled to the benefit of the said Circular. Hence there would be no requirement for tax deduction at source from the payments made to such corporations since their income is anyway exempt under the Act.

S.O. - It is hereby notified for general information that the organization Institute of Chemical Technology, Nathalal Parekh Marg, Matunga, Mumbai (PAN AAATI4951J) has been approved by the Central Government for the purpose of clause (ii) of sub-section (1) of section 35 of the Income-tax Act, 1961 (said Act), read with Rules 5C and 5E of the Income-tax Rules, 1962 (said Rules), from Assessment year 2014-2015 and onwards under the category “University College or other Institution”, engaged in research activities subject to the following conditions, namely:-

(i) The sums paid to the approved organization shall be utilized for scientific research;

(ii) The approved organization shall carry out scientific research through its faculty members or its enrolled students;

(iii) The approved organization shall maintain separate books of accounts in respect of the sums received by it for scientific research, reflect therein the amounts used for carrying out research, get such books audited by an accountant as defined in the explanation to sub-section (2) of section 288 of the said Act and furnish the report of such audit duly signed and verified by such accountant to the Commissioner of income-tax or the Director of Income-tax having jurisdiction over the case, by the due date of furnishing the return of income under sub-section (1) of section 139 of the said Act;

(iv) The approved organization shall maintain a separate statement of donations received and amounts applied for scientific research and a copy of such statement duly certified by the auditor shall accompany the report of audit referred to above.

2. The Central Government shall withdraw the approval if the approved organization:-

(a) fails to maintain separate books of accounts as referred to in sub-paragraph (iii) of paragraph 1; or

(b) fails to furnish its audit report as referred to in sub-paragraph (iii) of paragraph 1; or

(c) fails to furnish its statement of the donations received and sums applied for scientific research as referred to in sub-paragraph (iv) of paragraph 1; or

(d) ceases to carry on its research activities or its research activities are not found to be genuine; or

(e) ceases to conform to and comply with the provisions of clause (ii) of sub-section (1) of section 35 of the said Act read with Rules 5C and 5E of the said Rules.

S.O. 1014 (E).─ In exercise of the powers conferred by section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend theIncome-tax Rules, 1962, namely:-

1. (1) These rules may be called the Income-tax (Seventh Amendment) Rules, 2015.

(2) They shall be deemed to have come into force with effect from the 1st day of April, 2015.

(b) for sub-rule(3), the following sub-rule shall be substituted, namely:-

‘(3) The return of income referred to in sub-rule (1) shall be furnished by a person mentioned in column (ii) of the Table below to whom the conditions specified in column (iii) apply, in the manner specified in column (iv) thereof:-

Table

Sl.

Person

Condition

Manner of furnishing return of income

(i)

(ii)

(iii)

(iv)

1

Individual or Hindu undivided family

(a) Accounts are required to be audited under section 44AB of theAct;

Electronically under digital signature

(b) Where (a) is not applicable and,-

(I) the return is furnished in Form No. ITR-3 or Form No. ITR-4; or

(II) the person, being a resident, other than not ordinarily resident within the meaning of subsection (6) of section 6, has, (A) assets (including financial interest in any entity) located outside India; or (B) signing authority in any account located outside India; or (C) income from any source outside India;

(III) any relief, in respect of tax paid proviso to sub-rule (2) is required to be furnished electronically; or

(V) total income assessable under the Act during the previous year of the person (other than the person, being an individual of the age of 80 years or more at any time during the previous year and furnishing the return in Form ITR-1 or ITR-2),-

(i) exceeds five lakh rupees; or

(ii) any refund is claimed in the return of income; outside India, under section 90 or 90A or deduction of tax under section 91 is claimed; or

(IV) any report of audit referred to in

(A) Electronically under

digital signature; or

(B) Transmitting the data in the return electronically under electronic verification code; or (C) Transmitting the data in the return electronically

and thereafter submitting the

verification of the return in

Form ITR-V.

(c) In any other case.

(A) Electronically under digital signature; or

(B) Transmitting the data in the return electronically under electronic verification code; or

(C) Transmitting the data in the return electronically and thereafter submitting the verification of the return in Form ITR-V; or

(D) Paper form;

2.

Company

In all cases.

Electronically under digital signature.

3

A person required to furnish the return inForm ITR-7

(a) In case of a political party;

Electronically under digital signature;

(b) In any other case

(A) Electronically under digital signature; or

(B) Transmitting the data in the return electronically under electronic verification code; or

(C) Transmitting the data in the return electronically and thereafter submitting the verification of the return in Form ITR-V.

4.

Firm or limited liability Partnership or any person (other than a Person mentioned in Sl. 1 to 3 above) who is required to file return inForm ITR-5

(a) Accounts are required to be audited under section 44AB of theAct;

Electronically under digital signature;

(b) In any other case.

(A) Electronically under digital signature; or

(B) Transmitting the data in the return electronically under electronic verification code; or

(C) Transmitting the data in the return electronically and thereafter submitting the verification of the return in Form ITR-V.

Explanation.- For the purposes of this sub-rule “electronic verification code” means a code generated for the purpose of electronic verification of the person furnishing the return of income as per the data structure and standards specified by Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems).’

(d) in sub-rule (4), for the words and brackets, “Director-General of Income-tax (Systems)”, the words and brackets “Principal Director-General of Income-tax (Systems) or Director-General of Income-tax (Systems)” shall be substituted;

(e) in sub-rule (5), for the figures “2013”, the figures “2014” shall be substituted.

Notification No.40/2015 dated 15-04-2015

Approval of Indian Institute of Technology Samantapuri Bhubaneswar for the purpose of clause (ii) of sub-section (1) of section 35 of the Income-tax Act, 1961, read with Rules 5C and 5E of the Income-tax Rules, 1962 – 40/2015 – Dated 15-4-2015 – Income Tax

(TO BE PUBLISHED IN PART 11, SUB-SECTION (ii) OF

SECTION 3 OF THE GAZETTE OF INDIA)

Ministry of Finance

(Department of Revenue)

(Central Board of Direct Taxes)

Notification 40/2015

New Delhi, the 15th April, 2015

S.O. – It is hereby notified for general information that the organization Indian Institute of Technology Samantapuri Bhubaneswar (PAN – AAAAI2760A) has been approved by the Central Government for the purpose of clause (ii) of sub-section (1) of section 35 of the Income-tax Act, 1961 (said Act), read with Rules 5C and 5E of the Income-tax Rules, 1962 (said Rules), from Assessment year 2014-2015 and onwards under the category of “University College or other Institution”, engaged in scientific research activities subject to the following conditions, namely:-

(i)’ The sums paid to the approved organization shall be utilized only for scientific research; and not for other streams;

(ii) The approved organization shall carry out scientific research through its faculty members or its enrolled students;

(iii) The approved organization shall maintain separate books of accounts in respect of the sums received by it for scientific research, reflect therein the amounts used for carrying out research, get such books audited by an accountant as defined in the explanation to sub-section (2) of section 288of the said Act and furnish the report of such audit duly signed and verified by such accountant to the Commissioner of Income-tax or the Director of Income-tax having jurisdiction over the case, by the due date of furnishing the return of income under sub-section (1) of section 139 of the said Act;

(iv) The approved organization shall maintain a separate statement of donations received and amounts applied for scientific research and a copy of such statement duly certified by the auditor shall accompany the report of audit referred to above.

2. The Central Government shall withdraw the approval if the approved organization:

(a) fails to maintain separate books of accounts as referred to in sub-paragraph (iii) of paragraph 1; or

(b) fails to furnish its audit report as referred to in sub-paragraph (iii) of paragraph 1; or

(c) fails to furnish its statement of the donations received and sums applied for scientific research as referred to in sub-paragraph (iv) of paragraph 1; or

(d) ceases to carry on its research activities or its research activities are not found to be genuine; or

(e) ceases to conform to and comply with the provisions of clause (Ii) of sub-section (1) of section 35of the said Act read with rules 5C and 5E of the said Rules.

S.O. 1002 (E). - In exercise of the powers conferred by section 295, read with clause (14) of section 10 of the Income‐tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income‐tax Rules, 1962, namely:‐

(1) These rules may be called the Income‐tax (6th Amendment) Rules, 2015.

(2) They shall come into force on the 1st day of April, 2015.

2. In the Income‐tax Rules, 1962, in rule 2BB, in sub‐rule (2), in the Table,‐

(a) against serial number 10, in the entry under column(4),relating to the extent to which allowance is exempt, for the letters, figures and words “Rs.800 per month”, the letters, figures and words “Rs.1600 per month” shall be substituted;

(b) against serial number 11, in the entry under column (4),relating to the extent to which allowance is exempt, for the letters, figures and words “Rs.1600 per month”, the letters, figures and words “Rs.3200 per month” shall be substituted.

S. O. (E).- In exercise of the powers conferred by sub-section (11) of section 143 of theCompanies Act, 2013 ( 18 of 2013 ) and in supersession of the Companies (Auditor’s Report) Order, 2003, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 480 (E), dated the 12th June, 2003, except as respects things done or omitted to be done before such supersession, the Central Government, after consultation with the Institute of Chartered Accountants of India, constituted under the Chartered Accountants Act, 1949 (38 of 1949), hereby makes the following Order, namely:-

1. Short title, application and commencement. - (1) This order may be called the Companies (Auditor’s Report) Order, 2015.

(2) It shall apply to every company including a foreign company as defined in clause (42) of section 2 of the Companies Act, 2013 (18 of 2013) [hereinafter referred to as the Companies Act], except -

(i) a banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949);

(ii) an insurance company as defined under the Insurance Act, 1938 (4 of 1938);

(iii) a company licensed to operate under section 8 of the Companies Act;

(iv) a One Person Company as defined under clause (62) of section 2 of the Companies Act and a small company as defined under clause (85) of section 2 of the Companies Act; and

(v) a private limited company with a paid up capital and reserves not more than rupees fifty Iakh and which does not have loan outstanding exceeding rupees twenty five lakh from any bank or financial institution and does not have a turnover exceeding rupees five crore at any point of time during the financial year.

(3) It shall come into force on the date of its publication in the Official Gazette.

Every report made by the auditor under section 143 of the Companies Act, on the accounts of every company examined by him to which this Order applies for the financial year commencing on or after 1st April, 2014, shall contain the matters specified in paragraphs 3 and 4.

3. Matters to be included in the auditor’s report. - The auditor’s report on the account of a company to which this Order applies shall include a statement on the following matters, namely:-

(i) (a) whether the company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets;

(b) whether these fixed assets have been physically verified by the management at reasonable intervals; whether any material discrepancies were noticed on such verification and if so, whether the same have been properly dealt with in the books of account;

(ii) (a) whether physical verification of inventory has been conducted at reasonable intervals by the management;

(b) are the procedures of physical verification of inventory followed by the management reasonable and adequate in relation to the size of the company and the nature of its business. If not, the inadequacies in such procedures should be reported;

(c) whether the company is maintaining proper records of inventory and whether any material discrepancies were noticed on physical verification and if so, whether the same have been properly dealt with in the books of account;

(iii) whether the company has granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 189 of the Companies Act. If so,

(a) whether receipt of the principal amount and interest are also regular; and

(b) if overdue amount is more than rupees one lakh, whether reasonable steps have been taken by the company for recovery of the principal and interest;

(iv) is there an adequate internal control system commensurate with the size of the company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. Whether there is a continuing failure to correct major weaknesses in internal control system.

(v) in case the company has accepted deposits, whether the directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 or any other relevant provisions of the Companies Act. and the rules framed there under, where applicable, have been complied with? If not, the nature of contraventions should be stated; If an order has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other tribunal, whether the same has been complied with or not?

(vi) where maintenance of cost records has been specified by the Central Government undersub-section (1) of section 148 of the Companies Act, whether such accounts and records have been made and maintained;

(vii) (a) is the company regular in depositing undisputed statutory dues including provident fund, employees’ state insurance, income-tax, sales-tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues with the appropriate authorities and if not, the extent of the arrears of outstanding statutory dues as at the last day of the financial year concerned for a period of more than six months from the date they became payable, shall be indicated by the auditor.

(b) in case dues of income tax or sales tax or wealth tax or service tax or duty of customs or duty of excise or value added tax or cess have not been deposited on account of any dispute, then the amounts involved and the forum where dispute is pending shall be mentioned. (A mere representation to the concerned Department shall not constitute a dispute).

(c) whether the amount required to be transferred to investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made thereunder has been transferred to such fund within time.

(viii) whether in case of a company which has been registered for a period not less than five years, its accumulated losses at. the end of the financial year are not less than fifty per cent of its net worth and whether it has incurred cash losses in such financial year and in the immediately preceding financial year;

(ix) whether the company has defaulted in repayment of dues to a financial institution or bank or debenture holders? If yes, the period and amount of default to be reported;

(x) whether the company has given any guarantee for loans taken by others from bank or financial institutions, the terms and conditions whereof are prejudicial to the interest of the company;

(xi) whether term loans were applied for the purpose for which the loans were obtained;

(xii) whether any fraud on or by the company has been noticed or reported during the year; If yes, the nature and the amount involved is to be indicated.

4. Reasons to be stated for unfavourable or qualified answers.- (1) Where, in the auditor’s report, the answer to any of the questions referred to in paragraph 3 is unfavourable or qualified, the auditor’s report shall also state the reasons for such unfavourable or qualified answer, as the case may be.

(2) Where the auditor is unable to express any opinion in answer to a particular question, his report shall indicate such fact together with the reasons why it is not possible for him to give an answer to such question.

S.O. 995(E)- In exercise of the powers conferred by section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend theIncome-tax Rules, 1962, namely:-

1. (1) These rules may be called the Income tax (Fifth Amendment) Rules, 2015.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. In the Income-tax Rules, 1962, -

(1) in rule 114, -

(a) in sub-rule (1), the following proviso shall be inserted, namely:-

“Provided that in case of an applicant, being a company which has not been registered under the Companies Act, 2013 (18 of 2013), the application for allotment of a Permanent Account Number may be made in Form No. INC-7 specified under sub-section (1) of section 7 of the said Act for incorporation of the company.”;

(b) in sub-rule (4),-

(i) in the opening portion, after the words, brackets and figure “referred to in sub-rule (1)” the brackets, words and figure “[other than that referred to in the proviso to sub-rule (1)]” shall be inserted;

(ii) in the TABLE, in column (4),-

(I) against Sl. No. (1), for item (C) the following item shall be substituted, namely:-

“(C) Proof of date of birth-

copy of the following documents if they bear the name, date, month and year of birth of the applicant, namely:–

(a) birth certificate issued by the municipal authority or any office authorised to issue birth and death certificate by the Registrar of Birth and Deaths or the Indian Consulate as defined in clause (d) of sub-section (1) of section 2 of the Citizenship Act, 1955 (57 of 1955); or

(b) pension payment order; or

(c) marriage certificate issued by the Registrar of Marriages; or

(d) matriculation certificate or mark sheet of recognised board; or

(e) passport; or

(f) driving licence; or

(g) domicile certificate issued by the Government; or

(h) aadhar card issued by the Unique Identification Authority of India; or

(i) elector’s photo identity card; or

(j) photo identity card issued by the Central Government or State Government or Central Public Sector Undertaking or State Public Sector Undertaking; or

(II) against Sl. No. 3, for the words “Copy of Certificate of Registration issued by the Registrar of Companies.”, the following shall be substituted, namely:-

“(a) Copy of Certificate of Registration issued by the Registrar of Companies; or

(b) corporate identity number allotted by the Registrar under section 7 of theCompanies Act, 2013 (18 of 2013).”;

(2) in rule 114A, in sub-rule (1), the following proviso shall be inserted, namely:-

“Provided that in case of an applicant, being a company which has not been registered under the Companies Act, 2013 (18 of 2013), the application for allotment of a tax deduction and collection account number may be made in Form No. INC-7 specified under sub-section (1) of section 7 of the said Act for incorporation of the company.”.

[F.No.142/15/2013-TPL]

[Gaurav Kanaujia]

Director to Government of India

Note:- The principal rules were published vide notification number S.O. 969 (E), dated the 26th March, 1962 and last amended by Income-tax (fourth Amendment) Rules, 2015 vide notification number S.O. 915 (E), dated the 1st day of April, 2015.

Whereas the Central Government (Ministry of Commerce and Industry) in exercise of the powers under the Industrial Park Scheme, 2002 (hereinafter referred to as the Scheme), as notified vide number S.O. 354(E) dated the 1st April 2002, had granted approval vide letter No.15/13/05-IP&ID dated 17.02.2005 to the undertaking being developed, maintained and operated by M/s Meenakshi Infrastructure Private Ltd., Hyderabad at Survey No.5, 15, 17, Kondapur Village, Serilingampally, Rangareddy District, Andhra Pradesh as an Industrial Park;

And whereas, the Central Government (Ministry of Finance, Department of Revenue, CBDT) in exercise of the powers conferred by clause (iii) of sub-section (4) of section 80-IA of the Income-tax Act, 1961 (43 of 1961),(hereinafter referred to as the Act”) had notified the undertaking being developed and being maintained and operated by M/s Meenakshi Infrastructure Private Ltd., Hyderabad at Survey No. 5, 15, 17, Kondapur Village, Serilingampally, Rangareddy District, Andhra Pradesh as an Industrial Park for the purposes of the said clause (iii), vide notification of the Government of India in the Ministry of Finance, Department of Revenue, vide number S.O. No. 3466, dated the 21st August 2006 published in the Gazette of India, Part II, section 3, sub-section (ii) ;

And whereas, the Central Government (Ministry of Commerce & Industry) vide letter no.15/13/05-IP&ID dated 9th August, 2006 considered the request of the undertaking for transfer of operations and maintenance to M/s Vijay Infotech Ventures, Secunderabad, Andhra Pradesh;

And whereas, subsequently the Central Government (Ministry of Commerce and Industry) vide letter no. 15/12/2006-IP&ID dated 6th February, 2014 has rejected further amendment to the terms and conditions laid down vide its letter no. 15/12/2006-ID dated 10th April, 2007;

And whereas, the undertaking has failed to adhere to the terms and conditions as laid down in the Industrial Park Scheme and by the Central Government vide the Ministry of Finance, Department of Revenue’s Notification Number S.O.No.3466, dated the 21st August 2006 published in the Gazette of India, Part II, section 3, sub-section (ii) and Ministry of Commerce and Industry, Department of Industrial Policy and Promotion’s approval letter no.15/12/2006-ID dated 10th April, 2007;

Now, therefore the Central Government, in exercise of the powers conferred by clause (iii) of sub-section (4) of section 80-IA of the Act read with section 21 of the General Clause Act, 1897 (10 of 1897), hereby rescinds the said Notification No. S.O. 3466, dated the 21st August 2006 issued in the case of the undertaking with effect from 21st August 2006.

[F.NO.178/72/2006-ITA-I]

Notification No.36/2015 dated 10-04-2015

Section 10(46) of the Income-tax Act, 1961 Central Government notifies ‘Punjab State Electricity Regulatory Commission a Commission constituted by the Government of Punjab, in respect of the certain specified income arising to the said Commission. – 36/2015 – Dated 10-4-2015 – Income Tax

[To be published in the Gazette of India, Extraordinary,

Part-II, Section 3, Sub-section (ii)]

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

NOTIFICATION NO. 36/2015

New Delhi, the 10th April, 2015

In exercise of the powers conferred by clause (46) of section 10 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies for the purposes of the said clause, the ‘Punjab State Electricity Regulatory Commission’, constituted by the Government of Punjab, in respect of the following specified income arising to that Commission, namely:-

(a) amount received in the form of processing fee for determination of tariff;

(b) amount received in the form of licence fee;

(c) amount in the form of petition fee; and

(d) amount of interest income earned on bank deposits.

2. This notification shall be applicable for the financial years 2011-12 to 2015-16.

3. The notification shall be effective subject to the conditions that the Punjab State Electricity Regulatory Commission:-

(a) does not engage in any commercial activity;

(b) its activities and the nature of the specified income remain unchanged throughout the financial years; and

(c) it files return of income in accordance with the provision of clause (g) of sub-section (4C) of section 139 of the said Act.

[F.NO.196/42/2012-ITA.1]

Notification No.35/2015 dated 10-04-2015

Section 10(46) of the Income-tax Act, 1961 Central Government notifies ‘Haryana Electricity Regulatory Commission a Commission constituted by the Government of Haryana, in respect of the certain specified income arising to the said body. – 35/2015 – Dated 10-4-2015 – Income Tax

[To be published in the Gazette of India, Extraordinary,

Part-II, Section 3, Sub-section (ii)]

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

NOTIFICATION NO. 35/2015

New Delhi, the 10th April, 2015

In exercise of the powers conferred by clause (46) of section 10 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies for the purposes of the said clause, the ‘Haryana Electricity Regulatory Commission’, a Commission constituted under the Haryana Electricity Reform Act, 1997 (Haryana Act No.10 of 1998), in respect of the following specified income arising to that body, namely:-

(a) grants and loans made by the Government of Haryana;

(b) fees received under the Electricity Act, 2003 (36 of 2003);

(c) interest earned on government grants and loans and fees received under the Electricity Act, 2003 (36 of 2003).

2. The notification shall be subject to the conditions that the Haryana Electricity Regulatory Commission:-

(a) shall not engage in any commercial activity;

(b) its activities and the nature of the specified income remain unchanged throughout the financial years; and

(c) it files return of income in accordance with the provision of clause (g) of sub-section (4C) of section 139 of the said Act.

3. This notification shall be applicable for the Financial Years 2012-13 to 2016-17.

[F.NO.196/48/2012-ITA.1]

Notification No.34/2015 dated 10-04-2015

Section 10(46) of the Income-tax Act, 1961 Central Government notifies ‘Rajasthan State Pollution Control Board a Board constituted by the Government of Rajasthan, in respect of the certain specified income arising to the said Board – 34/2015 – Dated 10-4-2015 – Income Tax

[To be published in the Gazette of India, Extraordinary,

Part-II, Section 3, Sub-section (ii)]

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

NOTIFICATION NO. 34/2015

New Delhi, the 10th April, 2015

In exercise of the powers conferred by clause (46) of section 10 of the Income- tax Act, 1961 (43 of 1961) the Central Government hereby notifies for the purposes of the said clause, ‘Rajasthan State Pollution Control Board’, a Board constituted under the provisions of Water (Prevention and Control of Pollution) Act, 1974 (6 of 1974) of Rajasthan State Legislature in respect of the following specified income arising to that Board, namely:-

(a) amount received in the form of government grants;

(b) amount received as license fees and fines;

(c) interest earned on government grants, license fees and fines.

2. This notification shall be applicable for the Financial years 2012-13 to 2016-17.

3. The notification shall be effective subject to the conditions that Rajasthan State Pollution Control Board-

(a) shall not engage in any commercial activity;

(b) its activities and the nature of the specified income remain unchanged throughout the financial years; and

(c) files return of income in accordance with the provision of clause (g) of sub-section (4C) of section 139 of the Income-tax Act, 1961.

[F.NO.196/38/2012-ITA.1]

Notification No. : S.O. 1023(E) Dated: 10-4-2015

Set up a Sector Specific SEZ for Information Technology/Information Technology Enabled Services at Global Village , Pattenagere/Mylsandra Villages, Off-Mysore Road, RVCE Post, Bangalore District in the State of Karnataka – S.O. 1023(E) – Dated 10-4-2015 – Special Economic Zone

MINISTRY OF COMMERCE AND INDUSTRY

(Department of Commerce)

NOTIFICATION

New Delhi, the 10th April, 2015

S.O. 1023(E).-Whereas M/s. Tanglin Developments Limited had proposed under Section 3 of theSpecial Economic Zones Act, 2005 (28 of 2005) hereinafter referred to as the Act, to set up a Sector Specific SEZ for Information Technology/Information Technology Enabled Services at “Global Village”, Pattenagere/Mylsandra Villages, Off-Mysore Road, RVCE Post, Bangalore District in the State of Karnataka;

And whereas the Central Government, in exercise of the powers conferred by sub-section (1) of Section 4 of the Act read with rule 8 of the Special Economic Zones Rules, 2006, has notified areas of 26.673 hectares and 0.20 hectares at the above Special Economic Zone vide Ministry of Commerce and Industry Notification S.O. No. 1705(E), dated 5th October, 2006 and S.O. No. 2057(E), dated 11th March, 2014 respectively;

And whereas M/s. Tanglin Developments Limited has now proposed to include an additional area of 0.12 hectares to the above Special Economic Zone;

Now, therefore, in exercise of the powers conferred by second proviso to sub-section (1) of Section 4of the Special Economic Zone Act, 2005 and in pursuance of rule 8 of the Special Economic Zones Rules, 2006, the Central Government hereby notifies an additional area of 0.12 hectares as part of the Special Economic Zone, thereby making total area of the Special Economic Zone as 26.993 hectares, comprising the Survey numbers and the area given in the Table below:-

TABLE

S. No

Village

Survey No.

Area in hectares

1

Mylsandra

12/1 (P)

0.12

Grand Total Area of SEZ after above addition

26.993

[F. No. F. 2/106/2005-SEZ]

BHUPINDER S. BHALLA, Jt. Secy

No. Instruction No. 03/2015 Dated: 10-4-2015

India-UK Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion (DTAC or the Convention) – Suspension of Collection of Taxes during Mutual Agreement Procedure (MAP) – Order-Instruction – Dated 10-4-2015 – Income Tax

Instruction No. 3 /2015

F. No. 500/2/2015-APA-Il

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

Foreign Tax and Tax Research Division-I

APA-II Section

New Delhi, dated the 10th April, 2015

To

All Principal CCsIT and CCsIT

All Principal DsGIT and DsGIT

Subject: India-UK Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion (DTAC or the Convention) – Suspension of Collection of Taxes during Mutual Agreement Procedure (MAP) – Regarding.

Article 27 of the India-UK DTAC provides for a Mutual Agreement Procedure-(MAP) for avoidance of double taxation. Paragraph 4 of Article 27 authorises the Competent Authorities to develop appropriate bilateral procedures, conditions, methods and techniques for implementation of MAP provided for in the Article. Accordingly, with a view to avoid unintended hardship to the taxpayers, as well as for the efficient management of collection of. revenue, the Competent Authorities of India and UK had entered into a Memorandum of Understanding (MoU) regarding suspension of collection of taxes during the pendency of MAP.

2. This MoU was brought to the notice of the field formation vide Instruction No. 3/2004 dated 19/3/2004, wherein it was stated that the collection of outstanding taxes in the case of a taxpayer, who is a resident of UK and whose request under MAP is under consideration of the Competent Authorities, shall be kept in abeyance subject to furnishing of a bank guarantee of an amount equal to the amount of tax under dispute and interest accruing thereon as per the provisions of the Income-tax Act.

3. In view of a large number of transfer pricing disputes arising over a period of time and also in view of the stated intention of the MoU to avoid unintended hardship to the taxpayers involved in MAP, it is clarified that the provisions of the MoU are equally applicable to Indian resident taxpayers in cases involving transfer pricing adjustments, where MAP has been invoked by the UK resident. Thus, an Indian resident taxpayer liable to pay taxes on income, due to transfer pricing adjustments, which may have been charged to tax in the hands of its Associated Enterprise (AE) in UK, is covered under the provisions of the aforesaid MoU.

4.1 On receipt of a formal request for suspension of collection of outstanding tax in terms of the MoU from a taxpayer being a resident of UK, or a resident of India in cases involving transfer pricing adjustments, where MAP has been invoked through the UK Competent Authority, the Assessing Officers are required to keep the enforcement of collection of outstanding taxes in abeyance in respect of such taxpayer subject to fulfillment of the following conditions:

(I) the Foreign Tax and Tax Research Division of the Central Board of Direct Taxes confirms the pendency of MAP; and

(ii) the taxpayer furnishes a bank guarantee to the Assessing Officer in the model draft format annexed to the MoU for an amount calculated in accordance with the manner indicated therein.

4.2 The effect of the MoU is that the furnishing of the bank guarantee should be treated as sufficient arrangement to qualify for exercising discretion by the Assessing Officer for extension of time limit for payment of taxes in terms of sub-section (3) of Section 220 of the Income-tax Act. The extension, however, shall subsist only fill the time the case is under MAP. In case the Competent Authorities agree that there is no resolution possible, an intimation to this effect shall be given to the Assessing Officer who shall, thereafter, be entitled to invoke the bank guarantee in case the taxpayer fails to pay the demand.

4.3 In cases where a resolution of dispute is arrived at by the Competent Authorities after mutual consultation, the tax payable shall be determined by the Assessing Officer in terms of such resolution as per the procedure laid down in Instruction No. 1 dated 6.11.2002. After the revised notice of demand is sent to the taxpayer, the amount shall be recoverable from the taxpayer. In case the taxpayer fails to pay the demand, the bank guarantee so furnished shall be invoked after seeking the consent of the Indian Competent Authority, which shall grant the some after intimating its counterpart in UK.

4.4 The Assessing Officers as well as their controlling officers are advised to keep a close watch on the limitation of the bank guarantee furnished under the MAP.

5. A copy of the MoU, along with its Annexure containing the model draft format of the bank guarantee, is enclosed.

6. These instructions are issued under section 119 of the Income-tax Act and the same may be brought to the notice of all the officers in your charge.

Having regard to the hardship faced by the taxpayers during the pendency of a mutual agreement procedure, the Competent Authorities of India and the United States under the Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (the “Convention”) have determined and agreed that efficient processing of Mutual Agreement Procedure (“MAP”) cases will be facilitated by deferring assessment or suspending collection of any amounts of tax, including also any related interest or penalties, for any taxable years which are the subject of MAP proceedings.

WHEREAS:

(A) The Competent Authorities have arranged and desired to agree that with regard to amounts of taxes covered under Article 2 of the Convention and potentially payable to the government of the United States, the Internal Revenue Service will either defer assessment or suspend collection proceedings pursuant to its published procedures regarding MAP proceedings (currently set forth in Rev. Proc. 2002-52 or any successor procedure), until putting into effect a mutually agreed disposition of the MAP proceedings concerning the amounts in question; and

(B) The Competent. Authorities have arranged and desired to agree that with regard to amounts of taxes covered under Article 2 of the Convention and potentially payable to the government of India, the Assessing Officer will suspend collection until putting into effect a mutually agreed disposition of the MAP proceedings concerning the amounts in question.

NOW THEREFORE, in consideration of the premises, covenants and conditions herein contained and in implementing this arrangement:

IT IS HEREBY AGREED between the Competent Authorities as follows:

(1) The fax authorities of India and. the United States shall retain the right to demand security in appropriate cases, as deemed fit and necessary to avoid prejudicing the interests of their respective governments.

(2) in India, as security, a taxpayer shall provide an irrevocable Bank Guarantee issued by any scheduled bank, or by an Indian branch of a foreign bank approved by the Reserve Bank of India to carry out banking business in India, as per annexure ‘A’ to this Memorandum.

(3) In the United States, as security, a taxpayer shall, upon demand, provide an irrevocable Letter of Credit issued by a United States bank that is a of the Federal Reserve system, or by a United States branch or agency of a foreign bank that is on the National Association of Insurance Commissioners list of banks from which a Letter of Credit may be accepted.

(4) The amount, if any, for which security is demanded under paragraph (2) or (3) above, as the case may be, shall not exceed the amount of additional tax proposed or demanded by the tax authority requiring the security (aggregated for all the period(s) pending before the Competent Authorities), as adjusted by the Assessing Officer in accordance with domestic laws, and subject- to further adjustment for interest on these amounts calculated at the statutory rate on non-payments.

(5) Collection and assessment (if applicable) of any interest or penalty levied from the concerned taxpayer, in relation to amounts suspended’ from collection or deferred from assessment (if applicable) under this Agreement, shall also be suspended.

(6) The amounts of tax(es) identified under. Recitals (A) and (B) above, shall include but are not limited to:

(i) Tax demands that have arisen as a result of tax audit or appeal proceedings pending at the time of this agreement.

(ii) Tax demands, as a result of a tax assessment or re-assessment proceeding, or a tax appeal; or on a review by a Commissioner of Income Tax of an assessment (or re- assessment) proceeding on the grounds that it is prejudicial to the interests of the revenue that could arise subsequent to this agreement.

(iii) Withholding tax on income or other similar advance taxes that are the subject of MAP proceedings for prior, current or future taxable years.

(7) The Competent Authorities shall endeavour to either resolve or close the case within a period of two years from the date on which one Competent Authority notifies the other that the application from the Taxpayer(s) for assistance under the MAP has been received.

8) Any draw-down upon a Bank Guarantee or letter of Credit referred to in paragraph (2) or (3) above will be authorised only after notice by one Competent Authority to the other.

(9) In the event of a lapse of security under paragraph (2) or (3), the taxpayer shall be permitted to substitute another form of security under such paragraph, provided such substitution takes effect not less than 30 days prior to the lapse of the prior security. Such substitution will relieve the bank which provided the first Bank Guarantee or Letter of Credit from its obligations to the concerned Government of India or the United States under that first security.

(10) The terms of this Memorandum may be reviewed by the Competent Authorities at any time in the future upon the request of either party.

ANNEXURE A

To,

The President of India acting through and represented by

[Designation], Income Tax Department,

Ministry of Finance, Government of India, New Delhi

Bank Guarantee

Bank Guarantee as security for keeping the recovery of tax demand in abeyance during the pendency of a Mutual Agreement Procedure (“MAP”)

[Applicable in case of non-resident assessees, and Indian companies and other entities affiliated with United States companies, who have invoked the Mutual Agreement Procedure] This Deed of Bank Guarantee made this day of _____, 20__, by
[INSERT name and address of Guaranteeing Bank] (hereinafter called “the Bank”, which expression shall, unless excluded by or repugnant to the context, include its successors and assignees) to the President of India acting through and represented by [Designation], Income Tax Department, Ministry of, Finance, Government of India, New Delhi (hereinafter called “the Government” ).

WHEREAS the Government has agreed that __[INSERT name, address, permanent acccount number of the Assessee]__ (hereinafter called “the Assessee”, which expression shall, unless excluded by or repugnant to the context, include its successors and assignees) shall furnish a Bank Guarantee in respect of a demand of Rs.__[INSERT Amount of Tax in dispute]. for the assessment year(s) , in lieu of which the recovery of any part of such demand shall not be enforced until 30 days after the Assessing Officer receives written notice of the MAP Agreement between the Competent Authorities of the Governments of India and the United States, and the Assessee will not be treated as in default for the above assessment year(s);

AND WHEREAS THE Bank has at the request of the Assessee agreed to execute these presents:

NOW THEREFORE THIS DEED WITNESSES AS FOLLOWS

In consideration of the Government agreeing to treat the Assessee as not in default for Rs __[INSERT Amount of Tax in dispute, plus interest specified in paragraph (1) below]. for the assessment year(s)__

(1) The Bank irrevocably guarantees and undertakes, for the term provided in paragraph (2) below, that the Bank shall indemnify and keep indemnified the Government to the extent of the said sum of Rs .[INSERT Amount of Tax in dispute]. (Rupees __,[written text]) and interest accruing at the rate specified in the Income Tax Act of 1961 as amended from time to time, for non-payment of taxes on this amount after __[INSERT date from which recovery could otherwise be made]_ or any amount as adjusted by the order of the Assessing Officer which may be passed after the furnishing of the guarantee. On advice from the Government that the Assessee has failed and neglected to observe any of its obligations to the Government with regard to the terms and conditions of the agreements between the Assessee and the Government that may underlie this Bank Guarantee, the decision of the Government as to whether any amount should be paid out by the Bank to the Government hereunder shall be final and binding.

(2) The Bank further agrees that the guarantee herein contained shall remain in full force and effect for a period of 3 years from the date hereof, i.e., till _[INSERT date] ; and further agrees to renew this guarantee for another 3 years on the following terms: the Bank will provide the Government with written notice no later than 60 days prior to the expiration date of this Bank Guarantee if the taxpayer has not renewed the agreements between the Assessee and the Bank that underlie this Bank Guarantee for an additional period of 3 years. If the Government does not receive a renewal of this Bank Guarantee or a substitute Bank Guarantee for the amounts of tax and interest in dispute prior to 30 days before the expiration date of this Bank Guarantee, the Government may instruct the Bank to pay the guaranteed amounts prior to expiration of the Bank Guarantee. Provided further that, notwithstanding any other things contained herein, the liabilities of the Bank shall be limited to the maximum of the guaranteed amount of Rs.__[INSERT amount of tax in dispute]_ (Rupees _[INSERT written text]-), as increased by interest pursuant to paragraph (1 ) during the term of this Bank Guarantee; and unless a claim in writing is lodged with the Bank, or action to enforce the claim under the guarantee is filed or initiated against the Bank, within six months from the date of expiry of the guarantee period fixed hereunder or where such period is extended under the terms of this guarantee from the date of such extended period as the case may be, all the rights of the Government under this guarantee shall be forfeited and the Bank shall be relieved and discharged from liabilities hereunder.

(3) The obligations of the Bank to the Government under this Bank Guarantee will terminate upon the occurrence of any of the following for the taxable years in question:

(i) the payment by the Bank or the Assessee to the Government of the guaranteed amounts;

(ii) the payment by the Assessee to the Government of all amounts owed, as agreed to by the Competent Authorities in a MAP Agreement;

(iii) a MAP Agreement by the Competent Authorities that the Government will not seek to recover any part of the previously-demanded amounts;

or

(iv) the Assessee furnishes to the Government similar security from another Bank.

(4) The guarantee herein contained shall not be discharged or affected by any change in the constitution either of the Assessee or of the Bank.

(5) The Government shall have the fullest liberty without affecting the guarantee to postpone for any time, or from time to time, any of the powers exercisable by it against the Assessee, or to either enforce or forbear any of the terms and conditions under this guarantee or under the Income Tax Act and Income Tax Rules, and the Bank shall not be released from its liabilities under this guarantee by any exercise by the Government of the liberty with reference to the matter aforesaid or by reasons of time being given to the Assessee, or by any other act of forbearance or enforcement on the part of the Government, or by any indulgence by the Government to the Assessee, or by any other matter or thing whatsoever which under the law relating to sureties would but for these provisions have the effect of so releasing the Bank from its such liability. The Bank hereby agrees and undertakes that any claim which the Bank may have against the Assessee shall be subject and subordinate to the prior payment and performance in full of all the obligations of the Bank hereunder and the Bank will not without prior written consent of the Government exercise any legal rights or remedies of any kind in respect of any such payment or performance so long as the obligations of the Bank hereunder remain owing and outstanding, regardless of the insolvency, liquidation or bankruptcy of the Assessee or otherwise howsoever. The Bank will not counter claim or set off against its liabilities to the Government hereunder any sum outstanding to the credit of the Government with it.

(6) This Bank Guarantee shall be governed by and construed in accordance with the laws of the Republic of India (without regard to its principles of conflict of laws).

(7) The Bank undertakes not to revoke this Guarantee during its currency except with the previous consent of the Government in writing.

(8) Notwithstanding anything stated above, liability of the Bank under this guarantee is restricted to Rs._[INSERT Amount of Tax in dispute, plus interest specified in paragraph (1) above) (Rupees_[written text]) and is valid for the period(s) described in paragraph (2) above. Unless a demand or claim under this guarantee is lodged with the Bank on or before _[INSERT date, as established in paragraph (2) above]-, all rights of the Government under the said guarantee shall be forfeited and the Bank shall be relieved and discharged from all liabilities thereunder whether or not this document shall have been returned to the Bank.

IN WITNESS WHEREOF, the Bank, through its duly authorized representative, has set its hand stamp on this …….Day of ………….at……………….

Subject: Completion of PAN Migration activity as per the new jurisdiction orders post restructuring -reg.

After the new jurisdiction orders have been passed by you/ your officer’s subsequent to restructuring, the PAN requires to be migrated to the new Ward/ circle as per the new jurisdiction. It appears that this activity has not been completed by some of the field officers. This is causing inconvenience to a large number of taxpayers. The Chairperson CBDT has desired that this activity of migrating PANs must be completed by 25th April, 2015 so that the taxpayers are aware of their jurisdiction and grievances do not arise This is also a priority area as the tax payer need latest jurisdiction for filing of Return of Income.

Furthermore, I request you to provide the new jurisdiction of all ranges, circles and wards of your Region, on the National Website (www.incometaxindia.gov.in ) pages pertaining to your Region, to enable the taxpayers to have easy access to this information. A new button on “Jurisdiction” shall be created on your Regional page on the National Website by 30th April. You are requested to have the jurisdiction document uploaded on the website by 05th May 2015. As you may know, the training to all Regions’ nominated officers to upload and update the regional pages of the website has been imparted by the Directorate of Systems in December, 2014. The user name and password for uploading documents on your Regional pages has already been provided to your officers by the DIT(S)-4 team in January 2015. However, for facilitating this activity, DIT(S)-4 shall be circulating a common format and a step-by-step guide for your convenience. For any assistance with reference to uploading the jurisdiction document Sh. Rajendra Singh, JDIT (Mob.-9013852497) & Sh. Sanjaya Kumar Chaursia, DDIT(Mob.- 9013852864) may be contacted.

S. O. (E).- In exercise of the powers conferred by sub-section (11) of section 143 of theCompanies Act, 2013 ( 18 of 2013 ) and in supersession of the Companies (Auditor’s Report) Order, 2003, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 480 (E), dated the 12th June, 2003, except as respects things done or omitted to be done before such supersession, the Central Government, after consultation with the Institute of Chartered Accountants of India, constituted under the Chartered Accountants Act, 1949 (38 of 1949), hereby makes the following Order, namely:-

1. Short title, application and commencement. - (1) This order may be called the Companies (Auditor’s Report) Order, 2015.

(2) It shall apply to every company including a foreign company as defined in clause (42) of section 2 of the Companies Act, 2013 (18 of 2013) [hereinafter referred to as the Companies Act], except -

(i) a banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949);

(ii) an insurance company as defined under the Insurance Act, 1938 (4 of 1938);

(iii) a company licensed to operate under section 8 of the Companies Act;

(iv) a One Person Company as defined under clause (62) of section 2 of the Companies Act and a small company as defined under clause (85) of section 2 of the Companies Act; and

(v) a private limited company with a paid up capital and reserves not more than rupees fifty Iakh and which does not have loan outstanding exceeding rupees twenty five lakh from any bank or financial institution and does not have a turnover exceeding rupees five crore at any point of time during the financial year.

(3) It shall come into force on the date of its publication in the Official Gazette.

Every report made by the auditor under section 143 of the Companies Act, on the accounts of every company examined by him to which this Order applies for the financial year commencing on or after 1st April, 2014, shall contain the matters specified in paragraphs 3 and 4.

3. Matters to be included in the auditor’s report. - The auditor’s report on the account of a company to which this Order applies shall include a statement on the following matters, namely:-

(i) (a) whether the company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets;

(b) whether these fixed assets have been physically verified by the management at reasonable intervals; whether any material discrepancies were noticed on such verification and if so, whether the same have been properly dealt with in the books of account;

(ii) (a) whether physical verification of inventory has been conducted at reasonable intervals by the management;

(b) are the procedures of physical verification of inventory followed by the management reasonable and adequate in relation to the size of the company and the nature of its business. If not, the inadequacies in such procedures should be reported;

(c) whether the company is maintaining proper records of inventory and whether any material discrepancies were noticed on physical verification and if so, whether the same have been properly dealt with in the books of account;

(iii) whether the company has granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 189 of the Companies Act. If so,

(a) whether receipt of the principal amount and interest are also regular; and

(b) if overdue amount is more than rupees one lakh, whether reasonable steps have been taken by the company for recovery of the principal and interest;

(iv) is there an adequate internal control system commensurate with the size of the company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. Whether there is a continuing failure to correct major weaknesses in internal control system.

(v) in case the company has accepted deposits, whether the directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 or any other relevant provisions of the Companies Act. and the rules framed there under, where applicable, have been complied with? If not, the nature of contraventions should be stated; If an order has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other tribunal, whether the same has been complied with or not?

(vi) where maintenance of cost records has been specified by the Central Government undersub-section (1) of section 148 of the Companies Act, whether such accounts and records have been made and maintained;

(vii) (a) is the company regular in depositing undisputed statutory dues including provident fund, employees’ state insurance, income-tax, sales-tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues with the appropriate authorities and if not, the extent of the arrears of outstanding statutory dues as at the last day of the financial year concerned for a period of more than six months from the date they became payable, shall be indicated by the auditor.

(b) in case dues of income tax or sales tax or wealth tax or service tax or duty of customs or duty of excise or value added tax or cess have not been deposited on account of any dispute, then the amounts involved and the forum where dispute is pending shall be mentioned. (A mere representation to the concerned Department shall not constitute a dispute).

(c) whether the amount required to be transferred to investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made thereunder has been transferred to such fund within time.

(viii) whether in case of a company which has been registered for a period not less than five years, its accumulated losses at. the end of the financial year are not less than fifty per cent of its net worth and whether it has incurred cash losses in such financial year and in the immediately preceding financial year;

(ix) whether the company has defaulted in repayment of dues to a financial institution or bank or debenture holders? If yes, the period and amount of default to be reported;

(x) whether the company has given any guarantee for loans taken by others from bank or financial institutions, the terms and conditions whereof are prejudicial to the interest of the company;

(xi) whether term loans were applied for the purpose for which the loans were obtained;

(xii) whether any fraud on or by the company has been noticed or reported during the year; If yes, the nature and the amount involved is to be indicated.

4. Reasons to be stated for unfavourable or qualified answers.- (1)Where, in the auditor’s report, the answer to any of the questions referred to in paragraph 3 is unfavourable or qualified, the auditor’s report shall also state the reasons for such unfavourable or qualified answer, as the case may be.

(2) Where the auditor is unable to express any opinion in answer to a particular question, his report shall indicate such fact together with the reasons why it is not possible for him to give an answer to such question.

[File No. 17/45/2015-CL-V]

Amardeep Singh Bhatia

Joint Secretary to the Government of India

No. 07/2015 Dated: 10-4-2015

Remuneration to managerial person under Schedule XIII of the Companies Act, 1956 – Clarification with regard to payment for period. – Dated 10-4-2015 – Companies Law

General Circular No. 07/2015

F. No. 1/5/2013-CL-V

Government of India

Ministry of Corporate Affairs

5th Floor, ‘A’ Wing, Shastri Bhavan,

Dr R.P. Road, New Delhi

Dated: 10th April, 2015

To

All Regional Directors,

All Registrars of Companies,

All Stakeholders.

Subject: Remuneration to managerial person under Schedule XIII of the Companies Act, 1956 – Clarification with regard to payment for period.

Sir,

Stakeholders have drawn attention to the provisions of Schedule XIII (sixth proviso to Para (C) of Section II of Part II) of the Companies Act, 1956 (Earlier Act) and as clarified vide Circular number 14/11/2012-CL-VII dated 16th August, 2012, which allowed listed companies and their subsidiaries to pay remuneration, without approval of Central Government, in excess of limits specified in para II Para (C) of such Schedule if the managerial person met the conditions specified therein. Stakeholders have expressed that since similar provisions are not available in the Schedule V of theCompanies Act, 2013, there is a need for a clarification that a managerial person appointed in accordance with such provision of Schedule XIII of Earlier Act may receive relevant remuneration for the period as approved by the company in accordance with such provisions of Earlier Act.

2. The matter has been examined in the light of earlier clarifications on transitional matters issued by the Ministry. It is clarified that a managerial person referred to in para 1 above may continue to receive remuneration for his remaining term in accordance with terms and conditions approved by company as per relevant provisions of Schedule XIII of earlier Act even if the part of his/her tenure falls after 1st April, 2014.

3. This issues with the approval of the competent authority.

Yours faithfully

(K.M.S. Narayanan)

Assistant Director (Policy)

23387263

Copy to:-

1. e-Governance Section and web contents Officer to place this circular on the Ministry website

2. Guard File.

No. 06/2015 Dated: 9-4-2015

Capital gains in respect of units of Mutual Funds under the Fixed Maturity Plans on extension of their term – Circular – Dated 9-4-2015 – Income Tax

Circular No. 6 of 2015

F. No. 133/39/2014-TPL

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

(TPL Division)

Dated 9th April, 2015

Subject: Capital gains in respect of units of Mutual Funds under the Fixed Maturity Plans on extension of their term

As per the provisions of the Income-tax Act, 1961 (hereinafter referred to as the Act) prior to the amendment made by the Finance (No.2) Act, 2014, assets in the nature of shares, listed securities, units of mutual funds and zero coupon bonds qualified as long term capital assets if held for a period of more than twelve months as against the holding period of more than thirty-six months in case of other assets. Accordingly, units of a mutual fund under the Fixed Maturity Plans (FMPs) held for a period of more than twelve months qualified as long term capital asset. The amendment in sub-section (42A) of section 2 of the Act by the Finance (No.2) Act, 2014 changed the period of holding in case of unlisted shares and units of a mutual fund (other than an equity oriented fund) for their qualification as long term capital asset to more than thirty-six months. As a result, gains arising out of any investment in the units of FMPs made earlier and sold/redeemed after 10.07.2014 would be taxed as short-term capital gains if the unit was held for a period of thirty-six months or less.

2. FMPs are closed ended funds having a fixed maturity date wherein the duration of investment is decided upfront. The funds collected by FMPs are invested by the Asset Management Companies (AMCs) in securities having similar maturity period. To enable the FMPs to qualify as a long-term capital asset, some AMCs administering mutual funds have offered extension of the duration of the FMPs to a date beyond thirty-six months from the date of the original investment by providing to the investor an option of roll-over of FMPs in accordance with the provisions of Regulation 33(4) of the SEBI (Mutual Funds) Regulations, 1996. In this regard representations have been received in the Board seeking clarification regarding applicability of tax on capital gains in the hands of the unit holder at the time of roll over of FMPs that are closed ended schemes.

3. In this matter the Securities and Exchange Board of India (SEBI) has informed that Regulation 33(4) of the SERI (Mutual Funds) Regulations, 1996 allows the rollover of close-ended schemes. Such regulation provides the following:-

“(4) A close ended scheme shall be fully redeemed at the end of the maturity period: Provided that a close-ended scheme may be allowed to be rolled over if the purpose, period and other terms of the roll over and all other material details of the scheme including the likely composition of assets immediately before the roll over, the net assets and net asset value of the scheme, are disclosed to the unitholders and a copy of the same has been filed with the Board:

Provided further that such roll over will be permitted only in the case of those unitholders who express their consent in writing and the unitholders who do not opt for the roll over or have not given Written consent shall be allowed to redeem their holdings in full at net asset value based price.”

SEBI has clarified that in case of roll over in accordance with the aforesaid regulation the scheme remains the same and it does not constitute a different scheme.

4. In the case of mutual funds, the unit of a mutual fund constitutes a capital asset and any sale, exchange or relinquishment of such unit is a ‘transfer’ under clause (47) of section 2 of the Act. The roll over in accordance with the aforesaid regulation will not amount to transfer as the scheme remains the same. Accordingly, it is hereby clarified that no capital gains will arise at the time of exercise of the option by the investor to continue in the same scheme. The capital gains will, however, arise at the time of redemption of the units or opting out of the scheme, as the case may be.

(Gaurav Kanaujia)

Director to the Government of India

Copy to:-

1. PS to FM/ OSD to FM/ OSD to MoS(R).

2. PS to Secretary (Revenue).

3. The Chairperson, Members and all other officers in CBDT of the rank of Under Secretary and above.

4. All Pr. Chief Commissioners/ Pr. Director General of Income-tax with a request to circulate amongst all officers in their regions/ charges.

No. 05/2015 Dated: 9-4-2015

Interest under section 17B of the Wealth-tax Act (hereinafter the Act) is charged in case of default in furnishing of return of net wealth by an assessee. The interest is charged at the specified rate on the amount of tax payable on the net wealth. Since the provisions of section 17B do not provide for reduction of the amount of self-assessment tax from the amount on which interest under section 17Bis chargeable, interest is being charged on the amount of self-assessment tax paid by the assessee even before the due date of filing of return of net wealth.

2. It has been held by the Hon’ble Supreme Court in the case of CIT v. Prannoy Roy 309 ITR 231 (2009) that the interest under section 234A of the Income Tax Act, 1961 on default in furnishing return of income shall be payable only on the amount of tax that has not been deposited before the due date of filing of the income-tax return for the relevant assessment year. The Central Board of Direct Taxes (the Board) has already issued Circular No.2/2015 dated 10.02.2015 giving effect to the decision of the Hon’ble Supreme Court with regard to the provisions under the Income-tax Act.Maintaining an analogous position with regard to the provisions under the Wealth-tax Act, the Board has decided that no interest under section 17B of the Wealth-tax Act is chargeable on the amount of self-assessment tax paid by the assessee before the due date of filing return of net wealth.

3. This Circular may be brought to the notice of all officers for compliance.

Attention of this Ministry has been drawn to General Circular No 06/2013 dated 14.03.2013 vide which it was clarified that in cases where the effective yield (effective rate of return) on tax free bonds is greater than the yield on prevailing bank rate, there was no violation of Section 372A(3) ofCompanies Act, 1956. Stakeholders have requested for similar clarification w.r.t. correspondingsection 186(7) of the Companies Act, 2013.

2. The matter has been examined in the Ministry and it is hereby clarified that in cases where the effective yield (effective rate of return) on tax free bonds is greater than the prevailing yield of one year, three year, five year or ten year Government Security closest to the tenor of the loan, there is no violation of sub-section (7) of section 186 of the Companies Act, 2013.

Subject : Guidelines for Power Generation in Special Economic Zones - regarding.

The undersigned is directed to say that guidelines for power generation, transmission and distribution in Special Economic Zones issued vide this Ministry’s letter of even number dated 21thMarch, 2012 stand withdrawn with immediate effect i.e. 1st April, 2015.

2. The guidelines for power Generation, Transmission and Distribution in Special Economic Zone issued vide this Department’s letter of even number dated 27th February, 2009 are hereby restored and will, henceforth, be the basis for relevant policy and operational decisions.

No. PRESS RELEASE Dated: 1-4-2015

Applicability of CARO 2003 – Dated 1-4-2015 – Companies Law

We are receiving queries from the members regarding applicability of CARO, 2003 along with Auditors’ Report on financial statements of companies for the financial year 2014-15. The Ministry of Corporate Affairs (MCA) is working on it and has constituted a Committee for this purpose to analyse the contents of the Order to be made under section 143(11) of the Companies Act, 2013 for the Financial Year 2014-15. ICAI is also a member of the said committee. We are given to understand by MCA that an Order being a smaller version of CARO 2003, applicable for the financial year 2014-15, may be notified soon under section 143(11) of the Companies Act, 2013. However, at this juncture, to bring more clarity, this Announcement is released in consultation with the Ministry.

The Companies Act, 1956 has ceased to have effect from 01st April, 2014. As a corollary, theCompanies (Auditor’s Report) Order, 2003 issued under section 227(4A) of the said Act also ceases to have effect from the said date.

Section 143(11) of the Companies Act, 2013 which came into force from 01st April, 2014 provides that “the Central Government may, in consultation with the National Financial Reporting Authority, by general or special order, direct, in respect of such class or description of companies, as may be specified in the order, that the auditor’s report shall also include a statement on such matters as may be specified therein.”

Accordingly, it may be noted that as when an Order is notified by the Central Government undersection 143(11) of the Companies Act, 2013, the members would be required to report thereon as a part of their statutory audit reports.

Until the aforesaid Order is issued, no additional reporting under section 143(11) of the Companies Act, 2013 is required by the Auditors for the financial year 2014-15.

Members are advised to keep a watch on the MCA site (www.mca.gov.in ) as well as the ICAI site (www.icai.org) for further announcements in this regard.

A. Income Computation and Disclosure Standard I relating to accounting policies

Preamble

This Income Computation and Disclosure Standard is applicable for computation of income chargeable under the head “Profits and gains of business or profession” or “Income from other sources” and not for the purpose of maintenance of books of accounts.

In the case of conflict between the provisions of the Income-tax Act, 1961 (‘the Act’) and this Income Computation and Disclosure Standard, the provisions of the Act shall prevail to that extent.

Scope

1. This Income Computation and Disclosure Standard deals with significant accounting policies.

Fundamental Accounting Assumptions

2. The following are fundamental accounting assumptions, namely:-

(a) Going Concern

“Going concern” refers to the assumption that the person has neither the intention nor the necessity of liquidation or of curtailing materially the scale of the business,

profession or vocation and intends to continue his business, profession or vocation for the foreseeable future.

(b) Consistency

“Consistency” refers to the assumption that accounting policies are consistent from one period to another;

(c) Accrual

“Accrual” refers to the assumption that revenues and costs are accrued, that is, recognised as they are earned or incurred (and not as money is received or paid) and recorded in the previous year to which they relate.

Accounting Policies

3. The accounting policies refer to the specific accounting principles and the methods of applying those principles adopted by a person.

Considerations in the Selection and Change of Accounting Policies

4. Accounting policies adopted by a person shall be such so as to represent a true and fair view of the state of affairs and income of the business, profession or vocation. For this purpose,

(i) the treatment and presentation of transactions and events shall be governed by their substance and not merely by the legal form; and

(ii) marked to market loss or an expected loss shall not be recognised unless the recognition of such loss is in accordance with the provisions of any other Income Computation and Disclosure Standard.

5. An accounting policy shall not be changed without reasonable cause.

Disclosure of Accounting Policies

6. All significant accounting policies adopted by a person shall be disclosed.

7. Any change in an accounting policy which has a material effect shall be disclosed. The amount by which any item is affected by such change shall also be disclosed to the extent ascertainable. Where such amount is not ascertainable, wholly or in part, the fact shall be indicated. If a change is made in the accounting policies which has no material effect for the current previous year but which is reasonably expected to have a material effect in later previous years, the fact of such change shall be appropriately disclosed in the previous year in which the change is adopted and also in the previous year in which such change has material effect for the first time.

8. Disclosure of accounting policies or of changes therein cannot remedy a wrong or inappropriate treatment of the item.

9. If the fundamental accounting assumptions of Going Concern, Consistency and Accrual are followed, specific disclosure is not required. If a fundamental accounting assumption is not followed, the fact shall be disclosed.

Transitional Provisions

10. All contract or transaction existing on the 1st day of April, 2015 or entered into on or after the 1st day of April, 2015 shall be dealt with in accordance with the provisions of this standard after taking into account the income, expense or loss, if any, recognised in respect of the said contract or transaction for the previous year ending on or before the 31st March, 2015.

B. Income Computation and Disclosure Standard II relating to valuation of inventories

Preamble

This Income Computation and Disclosure Standard is applicable for computation of income chargeable under the head “Profits and gains of Business or profession” or “Income from other sources” and not for the purpose of maintenance of books of accounts.

In the case of conflict between the provisions of Income Tax Act, 1961 (‘the Act’) and this Income Computation and Disclosure Standard, the provisions of the Act shall prevail to that extent.

Scope

1. This Income Computation and Disclosure Standard shall be applied for valuation of inventories, except :

(a) Work-in-progress arising under ‘construction contract’ including directly related service contract which is dealt with by the Income Computation and Disclosure Standard on construction contracts;

(b) Work-in-progress which is dealt with by other Income Computation and Disclosure Standard;

(c) Shares, debentures and other financial instruments held as stock-in-trade which are dealt with by the Income Computation and Disclosure Standard on securities;

(d) Producers’ inventories of livestock, agriculture and forest products, mineral oils, ores and gases to the extent that they are measured at net realisable value;

(e) Machinery spares, which can be used only in connection with a tangible fixed asset and their use is expected to be irregular, shall be dealt with in accordance with the Income Computation and Disclosure Standard on tangible fixed assets.

Definitions

2(1) The following terms are used in this Income Computation and Disclosure Standard with the meanings specified:

(a) “Inventories” are assets:

(i) held for sale in the ordinary course of business;

(ii) in the process of production for such sale;

(iii) in the form of materials or supplies to be consumed in the production process or in the rendering of services.

(b) “Net realisable value” is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

2(2) Words and expressions used and not defined in this Income Computation and Disclosure Standard but defined in the Act shall have the meanings assigned to them in that Act.

4. Cost of inventories shall comprise of all costs of purchase, costs of services, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

Costs of Purchase

5. The costs of purchase shall consist of purchase price including duties and taxes, freight inwards and other expenditure directly attributable to the acquisition. Trade discounts, rebates and other similar items shall be deducted in determining the costs of purchase.

Costs of Services

6. The costs of services in the case of a service provider shall consist of labour and other costs of personnel directly engaged in providing the service including supervisory personnel and attributable overheads.

Costs of Conversion

7. The costs of conversion of inventories shall include costs directly related to the units of production and a systematic allocation of fixed and variable production overheads that are incurred in converting materials into finished goods. Fixed production overheads shall be those indirect costs of production that remain relatively constant regardless of the volume of production. Variable production overheads shall be those indirect costs of production that vary directly or nearly directly, with the volume of production.

8. The allocation of fixed production overheads for the purpose of their inclusion in the costs of conversion shall be based on the normal capacity of the production facilities. Normal capacity shall be the production expected to be achieved on an average over a number of periods or seasons under normal circumstances, taking into account the loss of capacity resulting from planned maintenance. The actual level of production shall be used when it approximates to normal capacity. The amount of fixed production overheads allocated to each unit of production shall not be increased as a consequence of low production or idle plant. Unallocated overheads shall be recognised as an expense in the period in which they are incurred. In periods of abnormally high production, the amount of fixed production overheads allocated to each unit of production is decreased so that inventories are not measured above the cost. Variable production overheads shall be assigned to each unit of production on the basis of the actual use of the production facilities.

9. Where a production process results in more than one product being produced simultaneously and the costs of conversion of each product are not separately identifiable, the costs shall be allocated between the products on a rational and consistent basis. Where by-products, scrap or waste material are immaterial, they shall be measured at net realisable value and this value shall be deducted from the cost of the main product.

Other Costs

10. Other costs shall be included in the cost of inventories only to the extent that they are incurred in bringing the inventories to their present location and condition.

11. Interest and other borrowing costs shall not be included in the costs of inventories, unless they meet the criteria for recognition of interest as a component of the cost as specified in the Income Computation and Disclosure Standard on borrowing costs.

Exclusions from the Cost of Inventories

12. In determining the cost of inventories in accordance with paragraphs 4 to paragraphs

11, the following costs shall be excluded and recognised as expenses of the period in which they are incurred, namely:-

(a) Abnormal amounts of wasted materials, labour, or other production costs;

(b)Storage costs, unless those costs are necessary in the production process prior to a further production stage;

(c) Administrative overheads that do not contribute to bringing the inventories to their present location and condition ;

(d)Selling costs.

Cost Formulae

13. The Cost of inventories of items

(i) that are not ordinarily interchangeable; and

(ii) goods or services produced and segregated for specific projects shall be assigned by specific identification of their individual costs.

15. Where there are a large numbers of items of inventory which are ordinarily interchangeable, specific identification of costs shall not be made.

First-in First-out and Weighted Average Cost Formula

16. Cost of inventories, other than the inventory dealt with in paragraph 13, shall be assigned by using the First-in First-out (FIFO), or weighted average cost formula. The formula used shall reflect the fairest possible approximation to the cost incurred in bringing the items of inventory to their present location and condition.

17. The FIFO formula assumes that the items of inventory which were purchased or produced first are consumed or sold first, and consequently the items remaining in inventory at the end of the period are those most recently purchased or produced. Under the weighted average cost formula, the cost of each item is determined from the weighted average of the cost of similar items at the beginning of a period and the cost of similar items purchased or produced during the period. The average shall be calculated on a periodic basis, or as each additional shipment is received, depending upon the circumstances.

Retail Method

18. Where it is impracticable to use the costing methods referred to in paragraph 16, the retail method can be used in the retail trade for measuring inventories of large number of rapidly changing items that have similar margins. The cost of the inventory is determined by reducing from the sales value of the inventory, the appropriate percentage gross margin. The percentage used takes into consideration inventory, which has been marked down to below its original selling price.

Net Realisable Value

19. Inventories shall be written down to net realisable value on an item-by-item basis. Where ‘items of inventory’ relating to the same product line having similar purposes or end uses and are produced and marketed in the same geographical area and cannot be practicably evaluated separately from other items in that product line, such inventories shall be grouped together and written down to net realisable value on an aggregate basis.

20. Net realisable value shall be based on the most reliable evidence available at the time of valuation. The estimates of net realisable value shall also take into consideration the purpose for which the inventory is held. The estimates shall take into consideration fluctuations of price or cost directly relating to events occurring after the end of previous year to the extent that such events confirm the conditions existing on the last day of the previous year.

21. Materials and other supplies held for use in the production of inventories shall not be written down below the cost, where the finished products in which they shall be incorporated are expected to be sold at or above the cost. Where there has been a decline in the price of materials and it is estimated that the cost of finished products will exceed the net realisable value, the value of materials shall be written down to net realisable value which shall be the replacement cost of such materials.

Value of Opening Inventory

22. The value of the inventory as on the beginning of the previous year shall be

(i) the cost of inventory available, if any, on the day of the commencement of the business when the business has commenced during the previous year; and

(ii) the value of the inventory as on the close of the immediately preceding previous year, in any other case.

Change of Method of Valuation of Inventory

23. The method of valuation of inventories once adopted by a person in any previous year shall not be changed without reasonable cause.

Valuation of Inventory in Case of Certain Dissolutions

24. In case of dissolution of a partnership firm or association of person or body of individuals, notwithstanding whether business is discontinued or not, the inventory on the date of dissolution shall be valued at the net realisable value.

Transitional Provisions

25. Interest and other borrowing costs, which do not meet the criteria for recognition of interest as a component of the cost as per para 11, but included in the cost of the opening inventory as on the 1st day of April, 2015, shall be taken into account for determining cost of such inventory for valuation as on the close of the previous year beginning on or after 1st day of April, 2015 if such inventory continue to remain part of inventory as on the close of the previous year beginning on or after 1st day of April, 2015.

Disclosure

26. The following aspects shall be disclosed, namely:-

(a) the accounting policies adopted in measuring inventories including the cost formulae used; and

(b) the total carrying amount of inventories and its classification appropriate to a person.

This Income Computation and Disclosure Standard is applicable for computation of income chargeable under the head “Profits and gains of business or profession” or “Income from other sources” and not for the purpose of maintenance of books of accounts.

In the case of conflict between the provisions of the Income-tax Act, 1961(‘the Act’) and this Income Computation and Disclosure Standard, the provisions of the Act shall prevail to that extent.

Scope

1. This Income Computation and Disclosure Standard should be applied in determination of income for a construction contract of a contractor.

Definitions

2 (1) The following terms are used in this Income Computation and Disclosure Standard with the meanings specified:

(a) “Construction contract” is a contract specifically negotiated for the construction of an asset or a combination of assets that are closely interrelated or interdependent in terms of their design, technology and function or their ultimate purpose or use and includes :

(i) contract for the rendering of services which are directly related to the construction of the asset, for example, those for the services of project managers and architects;

(ii) contract for destruction or restoration of assets, and the restoration of the environment following the demolition of assets.

(b) “Fixed price contract” is a construction contract in which the contractor agrees to a fixed contract price, or a fixed rate per unit of output, which may be subject to cost escalation clauses.

(c) “Cost plus contract” is a construction contract in which the contractor is reimbursed for allowable or otherwise defined costs, plus a mark up on these costs or a fixed fee.

(d) “Retentions” are amounts of progress billings which are not paid until the satisfaction of conditions specified in the contract for the payment of such amounts or until defects have been rectified.

(e) “Progress billings” are amounts billed for work performed on a contract whether or not they have been paid by the customer.

(f) “Advances” are amounts received by the contractor before the related work is performed.

2(2) Words and expressions used and not defined in this Income Computation and Disclosure Standard but defined in the Act shall have the meaning respectively assigned to them in the Act.

3. A construction contract may be negotiated for the construction of a single asset. A construction contract may also deal with the construction of a number of assets which are closely interrelated or interdependent in terms of their design, technology and function or their ultimate purpose or use.

4. Construction contracts are formulated in a number of ways which, for the purposes of this Income Computation and Disclosure Standard, are classified as fixed price contracts and cost plus contracts. Some construction contracts may contain characteristics of both a fixed price contract and a cost plus contract, for example, in the case of a cost plus contract with an agreed maximum price.

Combining and Segmenting Construction Contracts

5. The requirements of this Income Computation and Disclosure Standard shall be applied separately to each construction contract except as provided for in paragraphs 6, 7 and 8 herein. For reflecting the substance of a contract or a group of contracts, where it is necessary, the Income Computation and Disclosure

Standard should be applied to the separately identifiable components of a single contract or to a group of contracts together.

6. Where a contract covers a number of assets, the construction of each asset should be treated as a separate construction contract when:

(a) separate proposals have been submitted for each asset;

(b) each asset has been subject to separate negotiation and the contractor and customer have been able to accept or reject that part of the contract relating to each asset; and

(c) the costs and revenues of each asset can be identified.

7. A group of contracts, whether with a single customer or with several customers, should be treated as a single construction contract when:

(a) the group of contracts is negotiated as a single package;

(b) the contracts are so closely interrelated that they are, in effect, part of a single project with an overall profit margin; and

(c) the contracts are performed concurrently or in a continuous sequence.

8. Where a contract provides for the construction of an additional asset at the option of the customer or is amended to include the construction of an additional asset, the construction of the additional asset should be treated as a separate construction contract when:

(a) the asset differs significantly in design, technology or function from the asset or assets covered by the original contract; or

(b) the price of the asset is negotiated without having regard to the original contract price.

Contract Revenue

9. Contract revenue shall be recognised when there is reasonable certainty of its ultimate collection.

10. Contract revenue shall comprise of:

(a) the initial amount of revenue agreed in the contract, including retentions; and

(b) variations in contract work, claims and incentive payments:

(i) to the extent that it is probable that they will result in revenue; and

(ii) they are capable of being reliably measured.

11. Where contract revenue already recognised as income is subsequently written off in the books of accounts as uncollectible, the same shall be recognised as an expense and not as an adjustment of the amount of contract revenue.

Contract Costs

12. Contract costs shall comprise of :

(a) costs that relate directly to the specific contract;

(b) costs that are attributable to contract activity in general and can be allocated to the contract;

(c) such other costs as are specifically chargeable to the customer under the terms of the contract; and

(d) allocated borrowing costs in accordance with the Income Computation and Disclosure Standard on Borrowing Costs.

These costs shall be reduced by any incidental income, not being in the nature of interest, dividends or capital gains, that is not included in contract revenue.

13. Costs that cannot be attributed to any contract activity or cannot be allocated to a contract shall be excluded from the costs of a construction contract.

14. Contract costs include the costs attributable to a contract for the period from the date of securing the contract to the final completion of the contract. Costs that are incurred in securing the contract are also included as part of the contract costs, provided

(a) they can be separately identified; and

(b) it is probable that the contract shall be obtained.

When costs incurred in securing a contract are recognised as an expense in the period in which they are incurred, they are not included in contract costs when the contract is obtained in a subsequent period.

15. Contract costs that relate to future activity on the contract are recognised as an asset. Such costs represent an amount due from the customer and are classified as contract work in progress.

Recognition of Contract Revenue and Expenses

16. Contract revenue and contract costs associated with the construction contract should be recognised as revenue and expenses respectively by reference to the stage of completion of the contract activity at the reporting date.

17. The recognition of revenue and expenses by reference to the stage of completion of a contract is referred to as the percentage of completion method. Under this method, contract revenue is matched with the contract costs incurred in reaching the stage of completion, resulting in the reporting of revenue, expenses and profit which can be attributed to the proportion of work completed.

18. The stage of completion of a contract shall be determined with reference to:

(a) the proportion that contract costs incurred for work performed upto the reporting date bear to the estimated total contract costs; or

(b) surveys of work performed; or

(c) completion of a physical proportion of the contract work.

Progress payments and advances received from customers are not determinative of the stage of completion of a contract.

19. When the stage of completion is determined by reference to the contract costs incurred upto the reporting date, only those contract costs that reflect work performed are included in costs incurred upto the reporting date. Contract costs which are excluded are:

(a) contract costs that relate to future activity on the contract; and

(b) payments made to subcontractors in advance of work performed under the subcontract.

20. During the early stages of a contract, where the outcome of the contract cannot be estimated reliably contract revenue is recognised only to the extent of costs incurred. The early stage of a contract shall not extend beyond 25 % of the stage of completion.

Changes in Estimates

21. The percentage of completion method is applied on a cumulative basis in each previous year to the current estimates of contract revenue and contract costs. Where there is change in estimates, the changed estimates shall be used in determination of the amount of revenue and expenses in the period in which the change is made and in subsequent periods.

Transitional Provisions

22. Contract revenue and contract costs associated with the construction contract, which commenced on or before the 31st day of March, 2015 but not completed by the said date, shall be recognised as revenue and costs respectively in accordance with the provisions of this standard. The amount of contract revenue, contract costs or expected loss, if any, recognised for the said contract for any previous year commencing on or before the 1st day of April, 2014 shall be taken into account for recognising revenue and costs of the said contract for the previous year commencing on the 1st day of April, 2015 and subsequent previous years.

Disclosure

23. A person shall disclose:

(a) the amount of contract revenue recognised as revenue in the period; and

(b) the methods used to determine the stage of completion of contracts in progress.

24. A person shall disclose the following for contracts in progress at the reporting date, namely:-

This Income Computation and Disclosure Standard is applicable for computation of income chargeable under the head “Profits and gains of business or profession” or “Income from other sources” and not for the purpose of maintenance of books of accounts.

In the case of conflict between the provisions of the Income-tax Act, 1961 (‘the Act’) and this Income Computation and Disclosure Standard, the provisions of the Act shall prevail to that extent.

Scope

1(1) This Income Computation and Disclosure Standard deals with the bases for recognition of revenue arising in the course of the ordinary activities of a person from

(i) the sale of goods;

(ii) the rendering of services;

(iii) the use by others of the person’s resources yielding interest, royalties or dividends.

1(2) This Income Computation and Disclosure Standard does not deal with the aspects of revenue recognition which are dealt with by other Income Computation and Disclosure Standards.

Definitions

2(1) The following term is used in this Income Computation and Disclosure Standard with the meanings specified:

(a) “Revenue” is the gross inflow of cash, receivables or other consideration arising in the course of the ordinary activities of a person from the sale of goods, from the rendering of services, or from the use by others of the person’s resources yielding interest, royalties or dividends. In an agency relationship, the revenue is the amount of commission and not the gross inflow of cash, receivables or other consideration.

2(2) Words and expressions used and not defined in this Income Computation and Disclosure Standard but defined in the Act shall have the meanings assigned to them in that Act.

Sale of Goods

3. In a transaction involving the sale of goods, the revenue shall be recognised when the seller of goods has transferred to the buyer the property in the goods for a price or all significant risks and rewards of ownership have been transferred to the buyer and the seller retains no effective control of the goods transferred to a degree usually associated with ownership. In a situation, where transfer of property in goods does not coincide with the transfer of significant risks and rewards of ownership, revenue in such a situation shall be recognised at the time of transfer of significant risks and rewards of ownership to the buyer.

4. Revenue shall be recognised when there is reasonable certainty of its ultimate collection.

5. Where the ability to assess the ultimate collection with reasonable certainty is lacking at the time of raising any claim for escalation of price and export incentives, revenue recognition in respect of such claim shall be postponed to the extent of uncertainty involved.

Rendering of Services

6. Revenue from service transactions shall be recognised by the percentage completion method. Under this method, revenue from service transactions is matched with the service transactions costs incurred in reaching the stage of completion, resulting in the determination of revenue, expenses and profit which can be attributed to the proportion of work completed. Income Computation and Disclosure Standard on construction contract also requires the recognition of revenue on this basis. The requirements of that Standard shall mutatis mutandis apply to the recognition of revenue and the associated expenses for a service transaction.

The Use of Resources by Others Yielding Interest, Royalties or Dividends

7. Interest shall accrue on the time basis determined by the amount outstanding and the rate applicable. Discount or premium on debt securities held is treated as though it were accruing over the period to maturity.

8. Royalties shall accrue in accordance with the terms of the relevant agreement and shall be recognised on that basis unless, having regard to the substance of the transaction, it is more appropriate to recognise revenue on some other systematic and rational basis.

9. Dividends are recognised in accordance with the provisions of the Act.

Transitional Provisions

10. The transitional provisions of Income Computation and Disclosure Standard on construction contract shall mutatis mutandis apply to the recognition of revenue and the associated costs for a service transaction undertaken on or before the 31st day of March, 2015 but not completed by the said date.

11. Revenue for a transaction, other than a service transaction referred to in Para 10, undertaken on or before the 31st day of March, 2015 but not completed by the said date shall be recognised in accordance with the provisions of this standard for the previous year commencing on the 1st day of April, 2015 and subsequent previous year. The amount of revenue, if any, recognised for the said transaction for any previous year commencing on or before the 1st day of April, 2014 shall be taken into account for recognising revenue for the said transaction for the previous year commencing on the 1st day of April, 2015 and subsequent previous years.

Disclosure

12. Following disclosures shall be made in respect of revenue recognition, namely:-

(a) in a transaction involving sale of good, total amount not recognised as revenue during the previous year due to lack of reasonably certainty of its ultimate collection along with nature of uncertainty;

(b) the amount of revenue from service transactions recognised as revenue during the previous year;

(c) the method used to determine the stage of completion of service transactions in progress; and

This Income Computation and Disclosure Standard is applicable for computation of income chargeable under the head “Profits and gains of business or profession” or “Income from other sources” and not for the purpose of maintenance of books of accounts.

In the case of conflict between the provisions of the Income-tax Act, 1961 (‘the Act’) and this Income Computation and Disclosure Standard, the provisions of the Act shall prevail to that extent.

Scope

1. This Income Computation and Disclosure Standard deals with the treatment of tangible fixed assets.

Definitions

2(1) The following terms are used in this Income Computation and Disclosure Standard with the meanings specified:

(a) “Tangible fixed asset” is an asset being land, building, machinery, plant or furniture held with the intention of being used for the purpose of producing or providing goods or services and is not held for sale in the normal course of business.

(b) “Fair value” of an asset is the amount for which that asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction.

2(2) Words and expressions used and not defined in this Income Computation and Disclosure Standard but defined in the Act shall have the meanings assigned to them in that Act.

Identification of Tangible Fixed Assets

3. The definition in clause (a) of sub-paragraph (1) of paragraph 2 provides criteria for determining whether an item is to be classified as a tangible fixed asset.

4. Stand-by equipment and servicing equipment are to be capitalised. Machinery spares shall be charged to the revenue as and when consumed. When such spares can be used only in connection with an item of tangible fixed asset and their use is expected to be irregular, they shall be capitalised.

Components of Actual Cost

5. The actual cost of an acquired tangible fixed asset shall comprise its purchase price, import duties and other taxes, excluding those subsequently recoverable, and any directly attributable expenditure on making the asset ready for its intended use. Any trade discounts and rebates shall be deducted in arriving at the actual cost.

6. The cost of a tangible fixed asset may undergo changes subsequent to its acquisition or construction on account of

(i) price adjustment, changes in duties or similar factors; or

(ii) exchange fluctuation as specified in Income Computation and Disclosure Standard on the effects of changes in foreign exchange rates.

7. Administration and other general overhead expenses are to be excluded from the cost of tangible fixed assets if they do not relate to a specific tangible fixed asset. Expenses which are specifically attributable to construction of a project or to the acquisition of a tangible fixed asset or bringing it to its working condition, shall be included as a part of the cost of the project or as a part of the cost of the tangible fixed asset.

8. The expenditure incurred on start-up and commissioning of the project, including the expenditure incurred on test runs and experimental production, shall be capitalised. The expenditure incurred after the plant has begun commercial production, that is, production intended for sale or captive consumption, shall be treated as revenue expenditure.

Self- constructed Tangible Fixed Assets

9. In arriving at the actual cost of self-constructed tangible fixed assets, the same principles shall apply as those described in paragraphs 5 to 8. Cost of construction that relate directly to the specific tangible fixed asset and costs that are attributable to the construction activity in general and can be allocated to the specific tangible fixed asset shall be included in actual cost. Any internal profits shall be eliminated in arriving at such costs.

Non- monetary Consideration

10. When a tangible fixed asset is acquired in exchange for another asset, the fair value of the tangible fixed asset so acquired shall be its actual cost.

11. When a tangible fixed asset is acquired in exchange for shares or other securities, the fair value of the tangible fixed asset so acquired shall be its actual cost.

Improvements and Repairs

12. An Expenditure that increases the future benefits from the existing asset beyond its previously assessed standard of performance is added to the actual cost.

13. The cost of an addition or extension to an existing tangible fixed asset which is of a capital nature and which becomes an integral part of the existing tangible fixed asset is to be added to its actual cost. Any addition or extension, which has a separate identity and is capable of being used after the existing tangible fixed asset is disposed of, shall be treated as separate asset.

Valuation of Tangible Fixed Assets in Special Cases

14. Where a person owns tangible fixed assets jointly with others, the proportion in the actual cost, accumulated depreciation and written down value is grouped together with similar fully owned tangible fixed assets. Details of such jointly owned tangible fixed assets shall be indicated separately in the tangible fixed assets register.

15. Where several assets are purchased for a consolidated price, the consideration shall be apportioned to the various assets on a fair basis.

Transitional Provisions

16. The actual cost of tangible fixed assets, acquisition or construction of which commenced on or before the 31st day of March, 2015 but not completed by the said date, shall be recognised in accordance with the provisions of this standard. The amount of

actual cost, if any, recognised for the said assets for any previous year commencing on or before the 1st day of April, 2014 shall be taken into account for recognising actual cost of the said assets for the previous year commencing on the 1st day of April, 2015 and subsequent previous years.

Depreciation

17. Depreciation on a tangible fixed asset shall be computed in accordance with the provisions of the Act.

Transfers

18. Income arising on transfer of a tangible fixed asset shall be computed in accordance with the provisions of the Act.

Disclosures

19. Following disclosure shall be made in respect of tangible fixed assets, namely:-

(a) description of asset or block of assets;

(b) rate of depreciation;

(c) actual cost or written down value, as the case may be;

(d) additions or deductions during the year with dates; in the case of any addition of an asset, date put to use; including adjustments on account of-

F. Income Computation and Disclosure Standard VI relating to the effects of changes in foreign exchange rates

Preamble

This Income Computation and Disclosure Standard is applicable for computation of income chargeable under the head “Profits and gains of business or profession” or “Income from other sources” and not for the purpose of maintenance of books of accounts.

In the case of conflict between the provisions of the Income-tax Act, 1961 (‘the Act’) and this Income Computation and Disclosure Standard, the provisions of the Act shall prevail to that extent.

Scope

1. This Income Computation and Disclosure Standard deals with:

(a) treatment of transactions in foreign currencies;

(b) translating the financial statements of foreign operations;

(c) treatment of foreign currency transactions in the nature of forward exchange contracts.

Definitions

2. (1) The following terms are used in this Income Computation and Disclosure Standard with the meanings specified:

(a) “Average rate” is the mean of the exchange rates in force during a period.

(b) “Closing rate” is the exchange rate at the last day of the previous year.

(c) “Exchange difference” is the difference resulting from reporting the same number of units of a foreign currency in the reporting currency of a person at different exchange rates.

(d) “Exchange rate” is the ratio for exchange of two currencies.

(e) “Foreign currency” is a currency other than the reporting currency of a person.

(f) “Foreign operations of a person” is a branch, by whatever name called, of that person, the activities of which are based or conducted in a country other than India.

(g) “Foreign currency transaction” is a transaction which is denominated in or requires settlement in a foreign currency, including transactions arising when a person:-

(i) buys or sells goods or services whose price is denominated in a foreign currency; or

(ii) borrows or lends funds when the amounts payable or receivable are denominated in a foreign currency; or

(iii) becomes a party to an unperformed forward exchange contract; or

(iv) otherwise acquires or disposes of assets, or incurs or settles liabilities, denominated in a foreign currency.

(h) “Forward exchange contract” means an agreement to exchange different currencies at a forward rate, and includes a foreign currency option contract or another financial instrument of a similar nature;

(i) “Forward rate” is the specified exchange rate for exchange of two Currencies at a specified future date;

(j) “Indian currency” shall have the meaning as assigned to it in section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999);

(k) “Integral foreign operation” is a foreign operation, the activities of which are an integral part of the operation of the person;

(l) “Monetary items” are money held and assets to be received or liabilities to be paid in fixed or determinable amounts of money. Cash, receivables, and payables are examples of monetary items;

(m) “Non-integral foreign operation” is a foreign operation that is not an integral foreign operation;

(n) “Non-monetary items” are assets and liabilities other than monetary items. Fixed assets, inventories, and investments in equity shares are examples of non-monetary items;

(o) “Reporting currency” means Indian currency except for foreign operations where it shall mean currency of the country where the operations are carried out.

(2) Words and expressions used and not defined in this Income Computation and Disclosure Standard but defined in the Act shall have the meaning assigned to them in the Act.

Foreign Currency Transactions

Initial Recognition

3(1) A foreign currency transaction shall be recorded, on initial recognition in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

(2) An average rate for a week or a month that approximates the actual rate at the date of the transaction may be used for all transaction in each foreign currency occurring during that period. If the exchange rate fluctuates significantly, the actual rate at the date of the transaction shall be used.

(b) where the closing rate does not reflect with reasonable accuracy, the amount in reporting currency that is likely to be realised from or required to disburse, a foreign currency monetary item owing to restriction on remittances or the closing rate being unrealistic and it is not possible to effect an exchange of currencies at that rate, then the relevant monetary item shall be reported in the reporting currency at the amount which is likely to be realised from or required to disburse such item at the last date of the previous year; and

(c) non-monetary items in a foreign currency shall be converted into reporting currency by using the exchange rate at the date of the transaction.

Recognition of Exchange Differences

5. (i) In respect of monetary items, exchange differences arising on the settlement thereof or on conversion thereof at last day of the previous year shall be recognised as income or as expense in that previous year.

(ii) In respect of non-monetary items, exchange differences arising on conversion thereof at the last day of the previous year shall not be recognised as income or as expense in that previous year.

Exceptions to Paragraphs 3, 4 and 5

6. Notwithstanding anything contained in paragraph 3, 4 and 5; initial recognition, conversion and recognition of exchange difference shall be subject to provisions of section 43A of the Act or Rule 115 of Income-tax Rules, 1962, as the case may be.

Financial Statements of Foreign Operations

Classification of Foreign Operations

7. (1) The method used to translate the financial statements of a foreign operation depends on the way in which it is financed and operates in relation to a person. For this purpose, foreign operations are classified as either “integral foreign operations” or “non-integral foreign operations”.

(2) The following are indications that a foreign operation is a non-integral foreign operation rather than an integral foreign operation:-

(a) while the person may control the foreign operation, the activities of the foreign operation are carried out with a significant degree of autonomy from the activities of the person;

(b) transactions with the person are not a high proportion of the foreign operation’s activities;

(c) the activities of the foreign operation are financed mainly from its own operations or local borrowings;

(d) costs of labour, material and other components of the foreign operation’s products or services are primarily paid or settled in the local currency;

(e) the foreign operation’s sales are mainly in currencies other than Indian currency;

(f) cash flows of the person are insulated from the day-to-day activities of the foreign operation;

(g) sales prices for the foreign operation’s products or services are not primarily responsive on a short-term basis to changes in exchange rates but are determined more by local competition or local government regulation;

(h) there is an active local sales market for the foreign operation’s products or services, although there also might be significant amounts of exports.

Integral Foreign Operations

8. The financial statements of an integral foreign operation shall be translated using the principles and procedures in paragraphs 3 to 6 as if the transactions of the foreign operation had been those of the person himself.

Non-integral Foreign Operations

9. (1) In translating the financial statements of a non-integral foreign operation for a previous year, the person shall apply the following, namely:-

(a) the assets and liabilities, both monetary and non-monetary, of the non-integral foreign operation shall be translated at the closing rate;

(b) income and expense items of the non-integral foreign operation shall be translated at exchange rates at the dates of the transactions; and

(c) all resulting exchange differences shall be recognised as income or as expenses in that previous year.

(2) Notwithstanding anything stated in sub-paragraph 1, translation and recognition of exchange difference in cases referred to in section 43A of the Act or Rule 115 of Income-tax Rules, 1962 shall be carried out in accordance with the provisions contained in that section or that Rule, as the case may be.

Change in the Classification of a Foreign Operation

10(1) When there is a change in the classification of a foreign operation, the translation procedures applicable to the revised classification should be applied from the date of the change in the classification.

(2) The consistency principle requires that foreign operation once classified as integral or non-integral is continued to be so classified. However, a change in the way in which a foreign operation is financed and operates in relation to the person may lead to a change in the classification of that foreign operation.

Forward Exchange Contracts

11. (1) Any premium or discount arising at the inception of a forward exchange contract shall be amortised as expense or income over the life of the contract. Exchange differences on such a contract shall be recognised as income or as expense in the previous year in which the exchange rates change. Any profit or loss arising on cancellation or renewal shall be recognised as income or as expense for the previous year.

(2) The provisions of sub-para (1) shall apply provided that the contract:

(a) is not intended for trading or speculation purposes; and

(b) is entered into to establish the amount of the reporting currency required or available at the settlement date of the transaction.

(3) The provisions of sub-para (1) shall not apply to the contract that is entered into to hedge the foreign currency risk of a firm commitment or a highly probable forecast transaction. For this purpose, firm commitment, shall not include assets and liabilities existing at the end of the previous year.

(4) The premium or discount that arises on the contract is measured by the difference between the exchange rate at the date of the inception of the contract and the forward rate specified in the contract. Exchange difference on the contract is the difference between:

(a) the foreign currency amount of the contract translated at the exchange rate at the last day of the previous year, or the settlement date where the transaction is settled during the previous year; and

(b) the same foreign currency amount translated at the date of inception of the contract or the last day of the immediately preceding previous year, whichever is later.

(5) Premium, discount or exchange difference on contracts that are intended for trading or speculation purposes, or that are entered into to hedge the foreign currency risk of a firm commitment or a highly probable forecast transaction shall be recognised at the time of settlement.

Transitional Provisions

12. (1) All foreign currency transactions undertaken on or after 1st day of April, 2015 shall be recognised in accordance with the provisions of this standard.

(2) Exchange differences arising in respect of monetary items or non-monetary items, on the settlement thereof during the previous year commencing on the 1st day of April, 2015 or on conversion thereof at the last day of the previous year commencing on the 1st day of April, 2015, shall be recognised in accordance with the provisions of this standard after taking into account the amount recognised on the last day of the previous year ending on the 31st March,2015 for an item, if any, which is carried forward from said previous year.

(3) The financial statements of foreign operations for the previous year commencing on the 1st day of April, 2015 shall be translated using the principles and procedures specified in this standard after taking into account the amount recognised on the last day of the previous year ending on the 31st March, 2015 for an item, if any, which is carried forward from said previous year.

(4) All forward exchange contracts existing on the 1st day of April, 2015 or entered on or after 1st day of April, 2015 shall be dealt with in accordance with the provisions of this standard after taking into account the income or expenses, if any, recognised in respect of said contracts for the previous year ending on or before the 31st March, 2015.

G. Income Computation and Disclosure Standard VII relating to government grants

Preamble

This Income Computation and Disclosure Standard is applicable for computation of income chargeable under the head “Profits and gains of business or profession” or “Income from other sources” and not for the purpose of maintenance of books of account.

In case of conflict between the provisions of the Income Tax Act, 1961 (‘the Act’) and this Income Computation and Disclosure Standard, the provisions of the Act shall prevail to that extent.

Scope

1. This Income Computation and Disclosure Standard deals with the treatment of Government grants. The Government grants are sometimes called by other names such as subsidies, cash incentives, duty drawbacks, waiver, concessions, reimbursements, etc.

2. This Income Computation and Disclosure Standard does not deal with:-

(a) Government assistance other than in the form of Government grants; and

(b) Government participation in the ownership of the enterprise.

Definitions

3(1) The following terms are used in the Income Computation and Disclosure Standard with the meanings specified:

(a) “Government” refers to the Central Government, State Governments, agencies and similar bodies, whether local, national or international.

(b) “Government grants” are assistance by Government in cash or kind to a person for past or future compliance with certain conditions. They exclude those forms of Government assistance which cannot have a value placed upon them and the transactions with Government which cannot be distinguished from the normal trading transactions of the person.

3(2) Words and expressions used and not defined in this Income Computation and Disclosure Standard but defined in the Act shall have the meaning assigned to them in the Act.

Recognition of Government Grants

4(1) Government grants should not be recognised until there is reasonable assurance that (i) the person shall comply with the conditions attached to them, and (ii) the grants shall be received.

4(2) Recognition of Government grant shall not be postponed beyond the date of actual receipt.

Treatment of Government Grants

5. Where the Government grant relates to a depreciable fixed asset or assets of a person, the grant shall be deducted from the actual cost of the asset or assets concerned or from the written down value of block of assets to which concerned asset or assets belonged to.

6. Where the Government grant relates to a non-depreciable asset or assets of a person requiring fulfillment of certain obligations, the grant shall be recognised as income over the same period over which the cost of meeting such obligations is charged to income.

7. Where the Government grant is of such a nature that it cannot be directly relatable to the asset acquired, so much of the amount which bears to the total Government grant, the same proportion as such asset bears to all the assets in respect of or with reference to which the Government grant is so received, shall be deducted from the actual cost of the asset or shall be reduced from the written down value of block of assets to which the asset or assets belonged to.

8. The Government grant that is receivable as compensation for expenses or losses incurred in a previous financial year or for the purpose of giving immediate financial support to the person with no further related costs, shall be recognised as income of the period in which it is receivable.

9. The Government grants other than covered by paragraph 5, 6, 7, and 8 shall be recognised as income over the periods necessary to match them with the related costs which they are intended to compensate.

10. The Government grants in the form of non-monetary assets, given at a concessional rate, shall be accounted for on the basis of their acquisition cost.

Refund of Government Grants

11. The amount refundable in respect of a Government grant referred to in paragraphs 6, 8 and 9 shall be applied first against any unamortised deferred credit remaining in respect of the Government grant. To the extent that the amount refundable exceeds any such deferred credit, or where no deferred credit exists, the amount shall be charged to profit and loss statement.

12. The amount refundable in respect of a Government grant related to a depreciable fixed asset or assets shall be recorded by increasing the actual cost or written down value of block of assets by the amount refundable. Where the actual cost of the asset is increased, depreciation on the revised actual cost or written down value shall be provided prospectively at the prescribed rate.

Transitional Provisions

13. All the Government grants which meet the recognition criteria of para 4 on or after 1st day of April, 2015 shall be recognised for the previous year commencing on or after 1st day of April, 2015 in accordance with the provisions of this standard after taking into account the amount, if any, of the said Government grant recognised for any previous year ending on or before 31st day of March, 2015.

Disclosures

14. Following disclosure shall be made in respect of Government grants, namely:-

(a) nature and extent of Government grants recognised during the previous year by way of deduction from the actual cost of the asset or assets or from the written down value of block of assets during the previous year;

(b) nature and extent of Government grants recognised during the previous year as income;

(c) nature and extent of Government grants not recognised during the previous year by way of deduction from the actual cost of the asset or assets or from the written down value of block of assets and reasons thereof; and

(d) nature and extent of Government grants not recognised during the previous year as income and reasons thereof.

H. Income Computation and Disclosure Standard VIII relating to securities

Preamble

This Income Computation and Disclosure Standard is applicable for computation of income chargeable under the head “Profits and gains of business or profession” or “Income from other sources” and not for the purpose of maintenance of books of account.

In the case of conflict between the provisions of the Income-tax Act, 1961 (‘the Act’) and this Income Computation and Disclosure Standard, the provisions of the Act shall prevail to that extent.

Scope

1. This Income Computation and Disclosure Standard deals with securities held as stock-in-trade.

2. This Income Computation and Disclosure Standard does not deal with:

(a) the bases for recognition of interest and dividends on securities which are covered by the Income Computation and Disclosure Standard on revenue recognition;

(b) securities held by a person engaged in the business of insurance;

(c) securities held by mutual funds, venture capital funds, banks and public financial institutions formed under a Central or a State Act or so declared under the Companies Act, 1956 (1 of 1956) or the Companies Act, 2013 (18 of 2013).

Definitions

3(1) The following terms are used in this Income Computation and Disclosure Standard with the meanings specified:

(a) “Fair value” is the amount for which an asset could be exchanged between a knowledgeable, willing buyer and a knowledgeable, willing seller in an arm’s length transaction.

(b) “Securities” shall have the meaning assigned to it in clause (h) of Section 2 of the Securities Contract (Regulation) Act, 1956 (42 of 1956), other than Derivatives referred to in sub-clause (1a) of that clause.

3(2) Words and expressions used and not defined in this Income Computation and Disclosure Standard but defined in the Act shall have the meaning respectively assigned to them in the Act.

Recognition and Initial Measurement of Securities

4. A security on acquisition shall be recognised at actual cost.

5. The actual cost of a security shall comprise of its purchase price and include acquisition charges such as brokerage, fees, tax, duty or cess.

6. Where a security is acquired in exchange for other securities, the fair value of the security so acquired shall be its actual cost.

7. Where a security is acquired in exchange for another asset, the fair value of the security so acquired shall be its actual cost.

8. Where unpaid interest has accrued before the acquisition of an interest-bearing security and is included in the price paid for the security, the subsequent receipt of interest is allocated between pre-acquisition and post-acquisition periods; the pre-acquisition portion of the interest is deducted from the actual cost.

Subsequent Measurement of Securities

9. At the end of any previous year, securities held as stock-in-trade shall be valued at actual cost initially recognised or net realisable value at the end of that previous year, whichever is lower.

10. For the purpose of para 9, the comparison of actual cost initially recognised and net realisable value shall be done categorywise and not for each individual security. For this purpose, securities shall be classified into the following categories, namely:-

(a) shares;

(b) debt securities;

(c) convertible securities; and

(d) any other securities not covered above.

11. The value of securities held as stock-in-trade of a business as on the beginning of the previous year shall be:

(a) the cost of securities available, if any, on the day of the commencement of the business when the business has commenced during the previous year; and

(b) the value of the securities of the business as on the close of the immediately preceding previous year, in any other case.

12. Notwithstanding anything contained in para 9, 10 and 11, at the end of any previous year, securities not listed on a recognised stock exchange; or listed but not quoted on a recognised stock exchange with regularity from time to time, shall be valued at actual cost initially recognised.

13. For the purposes of para 9, 10 and 11 where the actual cost initially recognised cannot be ascertained by reference to specific identification, the cost of such security shall be determined on the basis of first-in-first-out method.

This Income Computation and Disclosure Standard is applicable for computation of income chargeable under the head “Profits and gains of business or profession” or “Income from other sources” and not for the purpose of maintenance of books of account.

In the case of conflict between the provisions of the Income-tax Act, 1961 (‘the Act’) and this Income Computation and Disclosure Standard, the provisions of the Act shall prevail to that extent.

Scope

1. (1) This Income Computation and Disclosure Standard deals with treatment of borrowing costs.

(2) This Income Computation and Disclosure Standard does not deal with the actual or imputed cost of owners’ equity and preference share capital.

Definitions

2. (1) The following terms are used in this Income Computation and Disclosure Standard with the meanings specified:

(a) “Borrowing costs” are interest and other costs incurred by a person in connection with the borrowing of funds and include:

(i) commitment charges on borrowings;

(ii) amortised amount of discounts or premiums relating to borrowings;

(iii) amortised amount of ancillary costs incurred in connection with the arrangement of borrowings;

(iv) finance charges in respect of assets acquired under finance leases or under other similar arrangements.

(ii) know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature, being intangible assets;

(iii) inventories that require a period of twelve months or more to bring them to a saleable condition.

(2) Words and expressions used and not defined in this Income Computation and Disclosure Standard but defined in the Act shall have the meaning assigned to them in the Act.

Recognition

3. Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset shall be capitalised as part of the cost of that asset. The amount of borrowing costs eligible for capitalisation shall be determined in accordance with this Income Computation and Disclosure Standard. Other borrowing costs shall be recognised in accordance with the provisions of the Act.

4. For the purposes of this Income Computation and Disclosure Standard, “capitalisation” in the context of inventory referred to in item (iii) of clause (b) of sub-paragraph (1) of paragraph 2means addition of borrowing cost to the cost of inventory.

Borrowing Costs Eligible for Capitalisation

5. To the extent the funds are borrowed specifically for the purposes of acquisition, construction or production of a qualifying asset, the amount of borrowing costs to be capitalised on that asset shall be the actual borrowing costs incurred during the period on the funds so borrowed.

6. To the extent the funds are borrowed generally and utilised for the purposes of acquisition, construction or production of a qualifying asset, the amount of borrowing costs to be capitalised shall be computed in accordance with the following formula namely :-

A x = B / C

Where

A =

borrowing costs incurred during the previous year except on borrowings directly relatable to specific purposes;

B =

(i) the average of costs of qualifying asset as appearing in the balance sheet of a person on the first day and the last day of the previous year;(ii) in case the qualifying asset does not appear in the balance sheet of a person on the first day or both on the first day and the last day of previous year, half of the cost of qualifying asset;(iii) in case the qualifying asset does not appear in the balance sheet of a person on the last day of previous year, the average of the costs of qualifying asset as appearing in the balance sheet of a person on the first day of the previous year and on the date of put to use or completion, as the case may be ,other than those qualifying assets which are directly funded out of specific borrowings; or

C =

the average of the amount of total assets as appearing in the balance sheet of a person on the first day and the last day of the previous year, other than those assets which are directly funded out of specific borrowings;

Commencement of Capitalisation

7. The capitalisation of borrowing costs shall commence:

(a) in a case referred to in paragraph 5, from the date on which funds were borrowed;

(b) in a case referred to in paragraph 6, from the date on which funds were utilised.

Cessation of Capitalisation

8. Capitalisation of borrowing costs shall cease:

(a) in case of a qualifying asset referred to in item (i) and (ii) of clause (b) of sub-paragraph (1) of paragraph 2, when such asset is first put to use;

(b) in case of inventory referred to in item (iii) of clause (b) of sub-paragraph (1) of paragraph 2, when substantially all the activities necessary to prepare such inventory for its intended sale are complete.

9. When the construction of a qualifying asset is completed in parts and a completed part is capable of being used while construction continues for the other parts, capitalisation of borrowing costs in relation to a part shall cease:-

(a) in case of part of a qualifying asset referred to in item (i) and (ii) of clause (b) of sub-paragraph (1) of paragraph 2, when such part of a qualifying asset is first put to use;

(b) in case of part of inventory referred to in item (iii) of clause (b) of sub-paragraph (1) of paragraph 2, when substantially all the activities necessary to prepare such part of inventory for its intended sale are complete.

Transitional Provisions

10. All the borrowing costs incurred on or after 1st day of April, 2015 shall be capitalised for the previous year commencing on or after 1st day of April, 2015 in accordance with the provisions of this standard after taking into account the amount of borrowing costs capitalised, if any, for the same borrowing for any previous year ending on or before 31st day of March, 2015.

Disclosure

11. The following disclosure shall be made in respect of borrowing costs, namely:-

(a) the accounting policy adopted for borrowing costs; and

(b) the amount of borrowing costs capitalised during the previous year.

This Income Computation and Disclosure Standard is applicable for computation of income chargeable under the head “Profits and gains of business or profession” or “Income from other sources” and not for the purpose of maintenance of books of accounts.

In the case of conflict between the provisions of the Income-tax Act, 1961 (‘the Act’) and this Income Computation and Disclosure Standard, the provisions of the Act shall prevail to that extent.

(c) arising in insurance business from contracts with policyholders; and

(d) covered by another Income Computation and Disclosure Standard.

2. This Income Computation and Disclosure Standard does not deal with the recognition of revenue which is dealt with by Income Computation and Disclosure Standard – Revenue Recognition.

3. The term ‘provision’ is also used in the context of items such as depreciation, impairment of assets and doubtful debts which are adjustments to the carrying amounts of assets and are not addressed in this Income Computation and Disclosure Standard.

Definitions

4(1) The following terms are used in this Income Computation and Disclosure Standard with the meanings specified:

(a) “Provision” is a liability which can be measured only by using a substantial degree of estimation.

(b) “Liability” is a present obligation of the person arising from past events, the settlement of which is expected to result in an outflow from the person of resources embodying economic benefits.

(c) “Obligating event” is an event that creates an obligation that results in a person having no realistic alternative to settling that obligation.

(d) “Contingent liability” is:

(i) a possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the person; or

(ii) a present obligation that arises from past events but is not recognised because:

(A) it is not reasonably certain that an outflow of resources embodying economic benefits will be required to settle the obligation; or

(B) a reliable estimate of the amount of the obligation cannot be made.

(e) “Contingent asset” is a possible asset that arises from past events the existence of which will be confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the person.

(f) “Executory contracts” are contracts under which neither party has performed any of its obligations or both parties have partially performed their obligations to an equal extent.

(g) “Present obligation” is an obligation if, based on the evidence available, its existence at the end of the previous year is considered reasonably certain.

4(2) Words and expressions used and not defined in this Income Computation and Disclosure Standard but defined in the Act shall have the meaning respectively assigned to them in the Act.

Recognition

Provisions

5. A provision shall be recognised when:

(a) a person has a present obligation as a result of a past event;

(b) it is reasonably certain that an outflow of resources embodying economic benefits will be required to settle the obligation; and

(c) a reliable estimate can be made of the amount of the obligation.

If these conditions are not met, no provision shall be recognised.

6. No provision shall be recognised for costs that need to be incurred to operate in the future.

7. It is only those obligations arising from past events existing independently of a person’s future actions, that is the future conduct of its business, that are recognised as provisions

8. Where details of a proposed new law have yet to be finalised, an obligation arises only when the legislation is enacted.

Contingent Liabilities

9. A person shall not recognise a contingent liability.

Contingent Assets

10. A person shall not recognise a contingent asset.

11. Contingent assets are assessed continually and when it becomes reasonably certain that inflow of economic benefit will arise, the asset and related income are recognised in the previous year in which the change occurs.

Measurement

Best Estimate

12. The amount recognised as a provision shall be the best estimate of the expenditure required to settle the present obligation at the end of the previous year. The amount of a provision shall not be discounted to its present value.

13. The amount recognised as asset and related income shall be the best estimate of the value of economic benefit arising at the end of the previous year. The amount and related income shall not be discounted to its present value.

Reimbursements

14. Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement shall be recognised when it is reasonably certain that reimbursement will be received if the person settles the obligation. The amount recognised for the reimbursement shall not exceed the amount of the provision.

15. Where a person is not liable for payment of costs in case the third party fails to pay, no provision shall be made for those costs.

16. An obligation, for which a person is jointly and severally liable, is a contingent liability to the extent that it is expected that the obligation will be settled by the other parties.

Review

17. Provisions shall be reviewed at the end of each previous year and adjusted to reflect the current best estimate. If it is no longer reasonably certain that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision should be reversed.

18. An asset and related income recognised as provided in para 11 shall be reviewed at the end of each previous year and adjusted to reflect the current best estimate. If it is no longer reasonably certain that an inflow of economic benefits will arise, the asset and related income shall be reversed.

Use of Provisions

19. A provision shall be used only for expenditures for which the provision was originally recognised.

Transitional Provisions

20. All the provisions or assets and related income shall be recognised for the previous year commencing on or after 1st day of April, 2015 in accordance with the provisions of this standard

after taking into account the amount recognised, if any, for the same for any previous year ending on or before 31st day of March, 2015.

Disclosure

21(1) Following disclosure shall be made in respect of each class of provision, namely:-

(a) a brief description of the nature of the obligation;

(b) the carrying amount at the beginning and end of the previous year;

(c) additional provisions made during the previous year, including increases to existing provisions;

(d) amounts used, that is incurred and charged against the provision, during the previous year;

(e) unused amounts reversed during the previous year; and

(f) the amount of any expected reimbursement, stating the amount of any asset that has been recognised for that expected reimbursement.

21(2) Following disclosure shall be made in respect of each class of asset and related income recognised as provided in para 11, namely:-

(a) a brief description of the nature of the asset and related income;

(b) the carrying amount of asset at the beginning and end of the previous year;

(c) additional amount of asset and related income recognised during the year, including increases to assets and related income already recognised; and

(d) amount of asset and related income reversed during the previous year.

S.O. 892 (E) - In exercise of the powers conferred by sub-section (2) of section 145 of the Income-tax Act, 1961 (43 of 1961) and in supersession of the notification of the Government of India in the Ministry of Finance, Department of Revenue, published in the Gazette of India, Part II, Section 3, Sub-section (ii), vide number S.O 69(E) dated the 25th January, 1996, except as respects things done or omitted to be done before such supersession, the Central Government hereby notifies the income computation and disclosure standards as specified in the Annexure to be followed by all assessees, following the mercantile system of accounting, for the purposes of computation of income chargeable to income-tax under the head “Profit and gains of business or profession” or “ Income from other sources”. This notification shall come into force with effect from 1st day of April, 2015, and shall accordingly apply to the assessment year 2016-17 and subsequent assessment years.

A. Income Computation and Disclosure Standard I relating to accounting policies

Preamble

This Income Computation and Disclosure Standard is applicable for computation of income chargeable under the head “Profits and gains of business or profession” or “Income from other sources” and not for the purpose of maintenance of books of accounts.

In the case of conflict between the provisions of the Income-tax Act, 1961 (‘the Act’) and this Income Computation and Disclosure Standard, the provisions of the Act shall prevail to that extent.

Scope

1. This Income Computation and Disclosure Standard deals with significant accounting policies.

Fundamental Accounting Assumptions

2. The following are fundamental accounting assumptions, namely:-

(a) Going Concern

“Going concern” refers to the assumption that the person has neither the intention nor the necessity of liquidation or of curtailing materially the scale of the business,

profession or vocation and intends to continue his business, profession or vocation for the foreseeable future.

(b) Consistency

“Consistency” refers to the assumption that accounting policies are consistent from one period to another;

(c) Accrual

“Accrual” refers to the assumption that revenues and costs are accrued, that is, recognised as they are earned or incurred (and not as money is received or paid) and recorded in the previous year to which they relate.

Accounting Policies

3. The accounting policies refer to the specific accounting principles and the methods of applying those principles adopted by a person.

Considerations in the Selection and Change of Accounting Policies

4. Accounting policies adopted by a person shall be such so as to represent a true and fair view of the state of affairs and income of the business, profession or vocation. For this purpose,

(i) the treatment and presentation of transactions and events shall be governed by their substance and not merely by the legal form; and

(ii) marked to market loss or an expected loss shall not be recognised unless the recognition of such loss is in accordance with the provisions of any other Income Computation and Disclosure Standard.

5. An accounting policy shall not be changed without reasonable cause.

Disclosure of Accounting Policies

6. All significant accounting policies adopted by a person shall be disclosed.

7. Any change in an accounting policy which has a material effect shall be disclosed. The amount by which any item is affected by such change shall also be disclosed to the extent ascertainable. Where such amount is not ascertainable, wholly or in part, the fact shall be indicated. If a change is made in the accounting policies which has no material effect for the current previous year but which is reasonably expected to have a material effect in later previous years, the fact of such change shall be appropriately disclosed in the previous year in which the change is adopted and also in the previous year in which such change has material effect for the first time.

8. Disclosure of accounting policies or of changes therein cannot remedy a wrong or inappropriate treatment of the item.

9. If the fundamental accounting assumptions of Going Concern, Consistency and Accrual are followed, specific disclosure is not required. If a fundamental accounting assumption is not followed, the fact shall be disclosed.

Transitional Provisions

10. All contract or transaction existing on the 1st day of April, 2015 or entered into on or after the 1st day of April, 2015 shall be dealt with in accordance with the provisions of this standard after taking into account the income, expense or loss, if any, recognised in respect of the said contract or transaction for the previous year ending on or before the 31st March, 2015.

B. Income Computation and Disclosure Standard II relating to valuation of inventories

Preamble

This Income Computation and Disclosure Standard is applicable for computation of income chargeable under the head “Profits and gains of Business or profession” or “Income from other sources” and not for the purpose of maintenance of books of accounts.

In the case of conflict between the provisions of Income Tax Act, 1961 (‘the Act’) and this Income Computation and Disclosure Standard, the provisions of the Act shall prevail to that extent.

Scope

1. This Income Computation and Disclosure Standard shall be applied for valuation of inventories, except :

(a) Work-in-progress arising under ‘construction contract’ including directly related service contract which is dealt with by the Income Computation and Disclosure Standard on construction contracts;

(b) Work-in-progress which is dealt with by other Income Computation and Disclosure Standard;

(c) Shares, debentures and other financial instruments held as stock-in-trade which are dealt with by the Income Computation and Disclosure Standard on securities;

(d) Producers’ inventories of livestock, agriculture and forest products, mineral oils, ores and gases to the extent that they are measured at net realisable value;

(e) Machinery spares, which can be used only in connection with a tangible fixed asset and their use is expected to be irregular, shall be dealt with in accordance with the Income Computation and Disclosure Standard on tangible fixed assets.

Definitions

2(1) The following terms are used in this Income Computation and Disclosure Standard with the meanings specified:

(a) “Inventories” are assets:

(i) held for sale in the ordinary course of business;

(ii) in the process of production for such sale;

(iii) in the form of materials or supplies to be consumed in the production process or in the rendering of services.

(b) “Net realisable value” is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

2(2) Words and expressions used and not defined in this Income Computation and Disclosure Standard but defined in the Act shall have the meanings assigned to them in that Act.

4. Cost of inventories shall comprise of all costs of purchase, costs of services, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

Costs of Purchase

5. The costs of purchase shall consist of purchase price including duties and taxes, freight inwards and other expenditure directly attributable to the acquisition. Trade discounts, rebates and other similar items shall be deducted in determining the costs of purchase.

Costs of Services

6. The costs of services in the case of a service provider shall consist of labour and other costs of personnel directly engaged in providing the service including supervisory personnel and attributable overheads.

Costs of Conversion

7. The costs of conversion of inventories shall include costs directly related to the units of production and a systematic allocation of fixed and variable production overheads that are incurred in converting materials into finished goods. Fixed production overheads shall be those indirect costs of production that remain relatively constant regardless of the volume of production. Variable production overheads shall be those indirect costs of production that vary directly or nearly directly, with the volume of production.

8. The allocation of fixed production overheads for the purpose of their inclusion in the costs of conversion shall be based on the normal capacity of the production facilities. Normal capacity shall be the production expected to be achieved on an average over a number of periods or seasons under normal circumstances, taking into account the loss of capacity resulting from planned maintenance. The actual level of production shall be used when it approximates to normal capacity. The amount of fixed production overheads allocated to each unit of production shall not be increased as a consequence of low production or idle plant. Unallocated overheads shall be recognised as an expense in the period in which they are incurred. In periods of abnormally high production, the amount of fixed production overheads allocated to each unit of production is decreased so that inventories are not measured above the cost. Variable production overheads shall be assigned to each unit of production on the basis of the actual use of the production facilities.

9. Where a production process results in more than one product being produced simultaneously and the costs of conversion of each product are not separately identifiable, the costs shall be allocated between the products on a rational and consistent basis. Where by-products, scrap or waste material are immaterial, they shall be measured at net realisable value and this value shall be deducted from the cost of the main product.

Other Costs

10. Other costs shall be included in the cost of inventories only to the extent that they are incurred in bringing the inventories to their present location and condition.

11. Interest and other borrowing costs shall not be included in the costs of inventories, unless they meet the criteria for recognition of interest as a component of the cost as specified in the Income Computation and Disclosure Standard on borrowing costs.

Exclusions from the Cost of Inventories

12. In determining the cost of inventories in accordance with paragraphs 4 to paragraphs

11, the following costs shall be excluded and recognised as expenses of the period in which they are incurred, namely:-

(a) Abnormal amounts of wasted materials, labour, or other production costs;

(b)Storage costs, unless those costs are necessary in the production process prior to a further production stage;

(c) Administrative overheads that do not contribute to bringing the inventories to their present location and condition ;

(d)Selling costs.

Cost Formulae

13. The Cost of inventories of items

(i) that are not ordinarily interchangeable; and

(ii) goods or services produced and segregated for specific projects shall be assigned by specific identification of their individual costs.

15. Where there are a large numbers of items of inventory which are ordinarily interchangeable, specific identification of costs shall not be made.

First-in First-out and Weighted Average Cost Formula

16. Cost of inventories, other than the inventory dealt with in paragraph 13, shall be assigned by using the First-in First-out (FIFO), or weighted average cost formula. The formula used shall reflect the fairest possible approximation to the cost incurred in bringing the items of inventory to their present location and condition.

17. The FIFO formula assumes that the items of inventory which were purchased or produced first are consumed or sold first, and consequently the items remaining in inventory at the end of the period are those most recently purchased or produced. Under the weighted average cost formula, the cost of each item is determined from the weighted average of the cost of similar items at the beginning of a period and the cost of similar items purchased or produced during the period. The average shall be calculated on a periodic basis, or as each additional shipment is received, depending upon the circumstances.

Retail Method

18. Where it is impracticable to use the costing methods referred to in paragraph 16, the retail method can be used in the retail trade for measuring inventories of large number of rapidly changing items that have similar margins. The cost of the inventory is determined by reducing from the sales value of the inventory, the appropriate percentage gross margin. The percentage used takes into consideration inventory, which has been marked down to below its original selling price.

Net Realisable Value

19. Inventories shall be written down to net realisable value on an item-by-item basis. Where ‘items of inventory’ relating to the same product line having similar purposes or end uses and are produced and marketed in the same geographical area and cannot be practicably evaluated separately from other items in that product line, such inventories shall be grouped together and written down to net realisable value on an aggregate basis.

20. Net realisable value shall be based on the most reliable evidence available at the time of valuation. The estimates of net realisable value shall also take into consideration the purpose for which the inventory is held. The estimates shall take into consideration fluctuations of price or cost directly relating to events occurring after the end of previous year to the extent that such events confirm the conditions existing on the last day of the previous year.

21. Materials and other supplies held for use in the production of inventories shall not be written down below the cost, where the finished products in which they shall be incorporated are expected to be sold at or above the cost. Where there has been a decline in the price of materials and it is estimated that the cost of finished products will exceed the net realisable value, the value of materials shall be written down to net realisable value which shall be the replacement cost of such materials.

Value of Opening Inventory

22. The value of the inventory as on the beginning of the previous year shall be

(i) the cost of inventory available, if any, on the day of the commencement of the business when the business has commenced during the previous year; and

(ii) the value of the inventory as on the close of the immediately preceding previous year, in any other case.

Change of Method of Valuation of Inventory

23. The method of valuation of inventories once adopted by a person in any previous year shall not be changed without reasonable cause.

Valuation of Inventory in Case of Certain Dissolutions

24. In case of dissolution of a partnership firm or association of person or body of individuals, notwithstanding whether business is discontinued or not, the inventory on the date of dissolution shall be valued at the net realisable value.

Transitional Provisions

25. Interest and other borrowing costs, which do not meet the criteria for recognition of interest as a component of the cost as per para 11, but included in the cost of the opening inventory as on the 1st day of April, 2015, shall be taken into account for determining cost of such inventory for valuation as on the close of the previous year beginning on or after 1st day of April, 2015 if such inventory continue to remain part of inventory as on the close of the previous year beginning on or after 1st day of April, 2015.

Disclosure

26. The following aspects shall be disclosed, namely:-

(a) the accounting policies adopted in measuring inventories including the cost formulae used; and

(b) the total carrying amount of inventories and its classification appropriate to a person.

This Income Computation and Disclosure Standard is applicable for computation of income chargeable under the head “Profits and gains of business or profession” or “Income from other sources” and not for the purpose of maintenance of books of accounts.

In the case of conflict between the provisions of the Income-tax Act, 1961(‘the Act’) and this Income Computation and Disclosure Standard, the provisions of the Act shall prevail to that extent.

Scope

1. This Income Computation and Disclosure Standard should be applied in determination of income for a construction contract of a contractor.

Definitions

2 (1) The following terms are used in this Income Computation and Disclosure Standard with the meanings specified:

(a) “Construction contract” is a contract specifically negotiated for the construction of an asset or a combination of assets that are closely interrelated or interdependent in terms of their design, technology and function or their ultimate purpose or use and includes :

(i) contract for the rendering of services which are directly related to the construction of the asset, for example, those for the services of project managers and architects;

(ii) contract for destruction or restoration of assets, and the restoration of the environment following the demolition of assets.

(b) “Fixed price contract” is a construction contract in which the contractor agrees to a fixed contract price, or a fixed rate per unit of output, which may be subject to cost escalation clauses.

(c) “Cost plus contract” is a construction contract in which the contractor is reimbursed for allowable or otherwise defined costs, plus a mark up on these costs or a fixed fee.

(d) “Retentions” are amounts of progress billings which are not paid until the satisfaction of conditions specified in the contract for the payment of such amounts or until defects have been rectified.

(e) “Progress billings” are amounts billed for work performed on a contract whether or not they have been paid by the customer.

(f) “Advances” are amounts received by the contractor before the related work is performed.

2(2) Words and expressions used and not defined in this Income Computation and Disclosure Standard but defined in the Act shall have the meaning respectively assigned to them in the Act.

3. A construction contract may be negotiated for the construction of a single asset. A construction contract may also deal with the construction of a number of assets which are closely interrelated or interdependent in terms of their design, technology and function or their ultimate purpose or use.

4. Construction contracts are formulated in a number of ways which, for the purposes of this Income Computation and Disclosure Standard, are classified as fixed price contracts and cost plus contracts. Some construction contracts may contain characteristics of both a fixed price contract and a cost plus contract, for example, in the case of a cost plus contract with an agreed maximum price.

Combining and Segmenting Construction Contracts

5. The requirements of this Income Computation and Disclosure Standard shall be applied separately to each construction contract except as provided for in paragraphs 6, 7 and 8 herein. For reflecting the substance of a contract or a group of contracts, where it is necessary, the Income Computation and Disclosure

Standard should be applied to the separately identifiable components of a single contract or to a group of contracts together.

6. Where a contract covers a number of assets, the construction of each asset should be treated as a separate construction contract when:

(a) separate proposals have been submitted for each asset;

(b) each asset has been subject to separate negotiation and the contractor and customer have been able to accept or reject that part of the contract relating to each asset; and

(c) the costs and revenues of each asset can be identified.

7. A group of contracts, whether with a single customer or with several customers, should be treated as a single construction contract when:

(a) the group of contracts is negotiated as a single package;

(b) the contracts are so closely interrelated that they are, in effect, part of a single project with an overall profit margin; and

(c) the contracts are performed concurrently or in a continuous sequence.

8. Where a contract provides for the construction of an additional asset at the option of the customer or is amended to include the construction of an additional asset, the construction of the additional asset should be treated as a separate construction contract when:

(a) the asset differs significantly in design, technology or function from the asset or assets covered by the original contract; or

(b) the price of the asset is negotiated without having regard to the original contract price.

Contract Revenue

9. Contract revenue shall be recognised when there is reasonable certainty of its ultimate collection.

10. Contract revenue shall comprise of:

(a) the initial amount of revenue agreed in the contract, including retentions; and

(b) variations in contract work, claims and incentive payments:

(i) to the extent that it is probable that they will result in revenue; and

(ii) they are capable of being reliably measured.

11. Where contract revenue already recognised as income is subsequently written off in the books of accounts as uncollectible, the same shall be recognised as an expense and not as an adjustment of the amount of contract revenue.

Contract Costs

12. Contract costs shall comprise of :

(a) costs that relate directly to the specific contract;

(b) costs that are attributable to contract activity in general and can be allocated to the contract;

(c) such other costs as are specifically chargeable to the customer under the terms of the contract; and

(d) allocated borrowing costs in accordance with the Income Computation and Disclosure Standard on Borrowing Costs.

These costs shall be reduced by any incidental income, not being in the nature of interest, dividends or capital gains, that is not included in contract revenue.

13. Costs that cannot be attributed to any contract activity or cannot be allocated to a contract shall be excluded from the costs of a construction contract.

14. Contract costs include the costs attributable to a contract for the period from the date of securing the contract to the final completion of the contract. Costs that are incurred in securing the contract are also included as part of the contract costs, provided

(a) they can be separately identified; and

(b) it is probable that the contract shall be obtained.

When costs incurred in securing a contract are recognised as an expense in the period in which they are incurred, they are not included in contract costs when the contract is obtained in a subsequent period.

15. Contract costs that relate to future activity on the contract are recognised as an asset. Such costs represent an amount due from the customer and are classified as contract work in progress.

Recognition of Contract Revenue and Expenses

16. Contract revenue and contract costs associated with the construction contract should be recognised as revenue and expenses respectively by reference to the stage of completion of the contract activity at the reporting date.

17. The recognition of revenue and expenses by reference to the stage of completion of a contract is referred to as the percentage of completion method. Under this method, contract revenue is matched with the contract costs incurred in reaching the stage of completion, resulting in the reporting of revenue, expenses and profit which can be attributed to the proportion of work completed.

18. The stage of completion of a contract shall be determined with reference to:

(a) the proportion that contract costs incurred for work performed upto the reporting date bear to the estimated total contract costs; or

(b) surveys of work performed; or

(c) completion of a physical proportion of the contract work.

Progress payments and advances received from customers are not determinative of the stage of completion of a contract.

19. When the stage of completion is determined by reference to the contract costs incurred upto the reporting date, only those contract costs that reflect work performed are included in costs incurred upto the reporting date. Contract costs which are excluded are:

(a) contract costs that relate to future activity on the contract; and

(b) payments made to subcontractors in advance of work performed under the subcontract.

20. During the early stages of a contract, where the outcome of the contract cannot be estimated reliably contract revenue is recognised only to the extent of costs incurred. The early stage of a contract shall not extend beyond 25 % of the stage of completion.

Changes in Estimates

21. The percentage of completion method is applied on a cumulative basis in each previous year to the current estimates of contract revenue and contract costs. Where there is change in estimates, the changed estimates shall be used in determination of the amount of revenue and expenses in the period in which the change is made and in subsequent periods.

Transitional Provisions

22. Contract revenue and contract costs associated with the construction contract, which commenced on or before the 31st day of March, 2015 but not completed by the said date, shall be recognised as revenue and costs respectively in accordance with the provisions of this standard. The amount of contract revenue, contract costs or expected loss, if any, recognised for the said contract for any previous year commencing on or before the 1st day of April, 2014 shall be taken into account for recognising revenue and costs of the said contract for the previous year commencing on the 1st day of April, 2015 and subsequent previous years.

Disclosure

23. A person shall disclose:

(a) the amount of contract revenue recognised as revenue in the period; and

(b) the methods used to determine the stage of completion of contracts in progress.

24. A person shall disclose the following for contracts in progress at the reporting date, namely:-

This Income Computation and Disclosure Standard is applicable for computation of income chargeable under the head “Profits and gains of business or profession” or “Income from other sources” and not for the purpose of maintenance of books of accounts.

In the case of conflict between the provisions of the Income-tax Act, 1961 (‘the Act’) and this Income Computation and Disclosure Standard, the provisions of the Act shall prevail to that extent.

Scope

1(1) This Income Computation and Disclosure Standard deals with the bases for recognition of revenue arising in the course of the ordinary activities of a person from

(i) the sale of goods;

(ii) the rendering of services;

(iii) the use by others of the person’s resources yielding interest, royalties or dividends.

1(2) This Income Computation and Disclosure Standard does not deal with the aspects of revenue recognition which are dealt with by other Income Computation and Disclosure Standards.

Definitions

2(1) The following term is used in this Income Computation and Disclosure Standard with the meanings specified:

(a) “Revenue” is the gross inflow of cash, receivables or other consideration arising in the course of the ordinary activities of a person from the sale of goods, from the rendering of services, or from the use by others of the person’s resources yielding interest, royalties or dividends. In an agency relationship, the revenue is the amount of commission and not the gross inflow of cash, receivables or other consideration.

2(2) Words and expressions used and not defined in this Income Computation and Disclosure Standard but defined in the Act shall have the meanings assigned to them in that Act.

Sale of Goods

3. In a transaction involving the sale of goods, the revenue shall be recognised when the seller of goods has transferred to the buyer the property in the goods for a price or all significant risks and rewards of ownership have been transferred to the buyer and the seller retains no effective control of the goods transferred to a degree usually associated with ownership. In a situation, where transfer of property in goods does not coincide with the transfer of significant risks and rewards of ownership, revenue in such a situation shall be recognised at the time of transfer of significant risks and rewards of ownership to the buyer.

4. Revenue shall be recognised when there is reasonable certainty of its ultimate collection.

5. Where the ability to assess the ultimate collection with reasonable certainty is lacking at the time of raising any claim for escalation of price and export incentives, revenue recognition in respect of such claim shall be postponed to the extent of uncertainty involved.

Rendering of Services

6. Revenue from service transactions shall be recognised by the percentage completion method. Under this method, revenue from service transactions is matched with the service transactions costs incurred in reaching the stage of completion, resulting in the determination of revenue, expenses and profit which can be attributed to the proportion of work completed. Income Computation and Disclosure Standard on construction contract also requires the recognition of revenue on this basis. The requirements of that Standard shall mutatis mutandis apply to the recognition of revenue and the associated expenses for a service transaction.

The Use of Resources by Others Yielding Interest, Royalties or Dividends

7. Interest shall accrue on the time basis determined by the amount outstanding and the rate applicable. Discount or premium on debt securities held is treated as though it were accruing over the period to maturity.

8. Royalties shall accrue in accordance with the terms of the relevant agreement and shall be recognised on that basis unless, having regard to the substance of the transaction, it is more appropriate to recognise revenue on some other systematic and rational basis.

9. Dividends are recognised in accordance with the provisions of the Act.

Transitional Provisions

10. The transitional provisions of Income Computation and Disclosure Standard on construction contract shall mutatis mutandis apply to the recognition of revenue and the associated costs for a service transaction undertaken on or before the 31st day of March, 2015 but not completed by the said date.

11. Revenue for a transaction, other than a service transaction referred to in Para 10, undertaken on or before the 31st day of March, 2015 but not completed by the said date shall be recognised in accordance with the provisions of this standard for the previous year commencing on the 1st day of April, 2015 and subsequent previous year. The amount of revenue, if any, recognised for the said transaction for any previous year commencing on or before the 1st day of April, 2014 shall be taken into account for recognising revenue for the said transaction for the previous year commencing on the 1st day of April, 2015 and subsequent previous years.

Disclosure

12. Following disclosures shall be made in respect of revenue recognition, namely:-

(a) in a transaction involving sale of good, total amount not recognised as revenue during the previous year due to lack of reasonably certainty of its ultimate collection along with nature of uncertainty;

(b) the amount of revenue from service transactions recognised as revenue during the previous year;

(c) the method used to determine the stage of completion of service transactions in progress; and

This Income Computation and Disclosure Standard is applicable for computation of income chargeable under the head “Profits and gains of business or profession” or “Income from other sources” and not for the purpose of maintenance of books of accounts.

In the case of conflict between the provisions of the Income-tax Act, 1961 (‘the Act’) and this Income Computation and Disclosure Standard, the provisions of the Act shall prevail to that extent.

Scope

1. This Income Computation and Disclosure Standard deals with the treatment of tangible fixed assets.

Definitions

2(1) The following terms are used in this Income Computation and Disclosure Standard with the meanings specified:

(a) “Tangible fixed asset” is an asset being land, building, machinery, plant or furniture held with the intention of being used for the purpose of producing or providing goods or services and is not held for sale in the normal course of business.

(b) “Fair value” of an asset is the amount for which that asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction.

2(2) Words and expressions used and not defined in this Income Computation and Disclosure Standard but defined in the Act shall have the meanings assigned to them in that Act.

Identification of Tangible Fixed Assets

3. The definition in clause (a) of sub-paragraph (1) of paragraph 2 provides criteria for determining whether an item is to be classified as a tangible fixed asset.

4. Stand-by equipment and servicing equipment are to be capitalised. Machinery spares shall be charged to the revenue as and when consumed. When such spares can be used only in connection with an item of tangible fixed asset and their use is expected to be irregular, they shall be capitalised.

Components of Actual Cost

5. The actual cost of an acquired tangible fixed asset shall comprise its purchase price, import duties and other taxes, excluding those subsequently recoverable, and any directly attributable expenditure on making the asset ready for its intended use. Any trade discounts and rebates shall be deducted in arriving at the actual cost.

6. The cost of a tangible fixed asset may undergo changes subsequent to its acquisition or construction on account of

(i) price adjustment, changes in duties or similar factors; or

(ii) exchange fluctuation as specified in Income Computation and Disclosure Standard on the effects of changes in foreign exchange rates.

7. Administration and other general overhead expenses are to be excluded from the cost of tangible fixed assets if they do not relate to a specific tangible fixed asset. Expenses which are specifically attributable to construction of a project or to the acquisition of a tangible fixed asset or bringing it to its working condition, shall be included as a part of the cost of the project or as a part of the cost of the tangible fixed asset.

8. The expenditure incurred on start-up and commissioning of the project, including the expenditure incurred on test runs and experimental production, shall be capitalised. The expenditure incurred after the plant has begun commercial production, that is, production intended for sale or captive consumption, shall be treated as revenue expenditure.

Self- constructed Tangible Fixed Assets

9. In arriving at the actual cost of self-constructed tangible fixed assets, the same principles shall apply as those described in paragraphs 5 to 8. Cost of construction that relate directly to the specific tangible fixed asset and costs that are attributable to the construction activity in general and can be allocated to the specific tangible fixed asset shall be included in actual cost. Any internal profits shall be eliminated in arriving at such costs.

Non- monetary Consideration

10. When a tangible fixed asset is acquired in exchange for another asset, the fair value of the tangible fixed asset so acquired shall be its actual cost.

11. When a tangible fixed asset is acquired in exchange for shares or other securities, the fair value of the tangible fixed asset so acquired shall be its actual cost.

Improvements and Repairs

12. An Expenditure that increases the future benefits from the existing asset beyond its previously assessed standard of performance is added to the actual cost.

13. The cost of an addition or extension to an existing tangible fixed asset which is of a capital nature and which becomes an integral part of the existing tangible fixed asset is to be added to its actual cost. Any addition or extension, which has a separate identity and is capable of being used after the existing tangible fixed asset is disposed of, shall be treated as separate asset.

Valuation of Tangible Fixed Assets in Special Cases

14. Where a person owns tangible fixed assets jointly with others, the proportion in the actual cost, accumulated depreciation and written down value is grouped together with similar fully owned tangible fixed assets. Details of such jointly owned tangible fixed assets shall be indicated separately in the tangible fixed assets register.

15. Where several assets are purchased for a consolidated price, the consideration shall be apportioned to the various assets on a fair basis.

Transitional Provisions

16. The actual cost of tangible fixed assets, acquisition or construction of which commenced on or before the 31st day of March, 2015 but not completed by the said date, shall be recognised in accordance with the provisions of this standard. The amount of

actual cost, if any, recognised for the said assets for any previous year commencing on or before the 1st day of April, 2014 shall be taken into account for recognising actual cost of the said assets for the previous year commencing on the 1st day of April, 2015 and subsequent previous years.

Depreciation

17. Depreciation on a tangible fixed asset shall be computed in accordance with the provisions of the Act.

Transfers

18. Income arising on transfer of a tangible fixed asset shall be computed in accordance with the provisions of the Act.

Disclosures

19. Following disclosure shall be made in respect of tangible fixed assets, namely:-

(a) description of asset or block of assets;

(b) rate of depreciation;

(c) actual cost or written down value, as the case may be;

(d) additions or deductions during the year with dates; in the case of any addition of an asset, date put to use; including adjustments on account of-

F. Income Computation and Disclosure Standard VI relating to the effects of changes in foreign exchange rates

Preamble

This Income Computation and Disclosure Standard is applicable for computation of income chargeable under the head “Profits and gains of business or profession” or “Income from other sources” and not for the purpose of maintenance of books of accounts.

In the case of conflict between the provisions of the Income-tax Act, 1961 (‘the Act’) and this Income Computation and Disclosure Standard, the provisions of the Act shall prevail to that extent.

Scope

1. This Income Computation and Disclosure Standard deals with:

(a) treatment of transactions in foreign currencies;

(b) translating the financial statements of foreign operations;

(c) treatment of foreign currency transactions in the nature of forward exchange contracts.

Definitions

2. (1) The following terms are used in this Income Computation and Disclosure Standard with the meanings specified:

(a) “Average rate” is the mean of the exchange rates in force during a period.

(b) “Closing rate” is the exchange rate at the last day of the previous year.

(c) “Exchange difference” is the difference resulting from reporting the same number of units of a foreign currency in the reporting currency of a person at different exchange rates.

(d) “Exchange rate” is the ratio for exchange of two currencies.

(e) “Foreign currency” is a currency other than the reporting currency of a person.

(f) “Foreign operations of a person” is a branch, by whatever name called, of that person, the activities of which are based or conducted in a country other than India.

(g) “Foreign currency transaction” is a transaction which is denominated in or requires settlement in a foreign currency, including transactions arising when a person:-

(i) buys or sells goods or services whose price is denominated in a foreign currency; or

(ii) borrows or lends funds when the amounts payable or receivable are denominated in a foreign currency; or

(iii) becomes a party to an unperformed forward exchange contract; or

(iv) otherwise acquires or disposes of assets, or incurs or settles liabilities, denominated in a foreign currency.

(h) “Forward exchange contract” means an agreement to exchange different currencies at a forward rate, and includes a foreign currency option contract or another financial instrument of a similar nature;

(i) “Forward rate” is the specified exchange rate for exchange of two Currencies at a specified future date;

(j) “Indian currency” shall have the meaning as assigned to it in section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999);

(k) “Integral foreign operation” is a foreign operation, the activities of which are an integral part of the operation of the person;

(l) “Monetary items” are money held and assets to be received or liabilities to be paid in fixed or determinable amounts of money. Cash, receivables, and payables are examples of monetary items;

(m) “Non-integral foreign operation” is a foreign operation that is not an integral foreign operation;

(n) “Non-monetary items” are assets and liabilities other than monetary items. Fixed assets, inventories, and investments in equity shares are examples of non-monetary items;

(o) “Reporting currency” means Indian currency except for foreign operations where it shall mean currency of the country where the operations are carried out.

(2) Words and expressions used and not defined in this Income Computation and Disclosure Standard but defined in the Act shall have the meaning assigned to them in the Act.

Foreign Currency Transactions

Initial Recognition

3(1) A foreign currency transaction shall be recorded, on initial recognition in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

(2) An average rate for a week or a month that approximates the actual rate at the date of the transaction may be used for all transaction in each foreign currency occurring during that period. If the exchange rate fluctuates significantly, the actual rate at the date of the transaction shall be used.

(b) where the closing rate does not reflect with reasonable accuracy, the amount in reporting currency that is likely to be realised from or required to disburse, a foreign currency monetary item owing to restriction on remittances or the closing rate being unrealistic and it is not possible to effect an exchange of currencies at that rate, then the relevant monetary item shall be reported in the reporting currency at the amount which is likely to be realised from or required to disburse such item at the last date of the previous year; and

(c) non-monetary items in a foreign currency shall be converted into reporting currency by using the exchange rate at the date of the transaction.

Recognition of Exchange Differences

5. (i) In respect of monetary items, exchange differences arising on the settlement thereof or on conversion thereof at last day of the previous year shall be recognised as income or as expense in that previous year.

(ii) In respect of non-monetary items, exchange differences arising on conversion thereof at the last day of the previous year shall not be recognised as income or as expense in that previous year.

Exceptions to Paragraphs 3, 4 and 5

6. Notwithstanding anything contained in paragraph 3, 4 and 5; initial recognition, conversion and recognition of exchange difference shall be subject to provisions of section 43A of the Act or Rule 115 of Income-tax Rules, 1962, as the case may be.

Financial Statements of Foreign Operations

Classification of Foreign Operations

7. (1) The method used to translate the financial statements of a foreign operation depends on the way in which it is financed and operates in relation to a person. For this purpose, foreign operations are classified as either “integral foreign operations” or “non-integral foreign operations”.

(2) The following are indications that a foreign operation is a non-integral foreign operation rather than an integral foreign operation:-

(a) while the person may control the foreign operation, the activities of the foreign operation are carried out with a significant degree of autonomy from the activities of the person;

(b) transactions with the person are not a high proportion of the foreign operation’s activities;

(c) the activities of the foreign operation are financed mainly from its own operations or local borrowings;

(d) costs of labour, material and other components of the foreign operation’s products or services are primarily paid or settled in the local currency;

(e) the foreign operation’s sales are mainly in currencies other than Indian currency;

(f) cash flows of the person are insulated from the day-to-day activities of the foreign operation;

(g) sales prices for the foreign operation’s products or services are not primarily responsive on a short-term basis to changes in exchange rates but are determined more by local competition or local government regulation;

(h) there is an active local sales market for the foreign operation’s products or services, although there also might be significant amounts of exports.

Integral Foreign Operations

8. The financial statements of an integral foreign operation shall be translated using the principles and procedures in paragraphs 3 to 6 as if the transactions of the foreign operation had been those of the person himself.

Non-integral Foreign Operations

9. (1) In translating the financial statements of a non-integral foreign operation for a previous year, the person shall apply the following, namely:-

(a) the assets and liabilities, both monetary and non-monetary, of the non-integral foreign operation shall be translated at the closing rate;

(b) income and expense items of the non-integral foreign operation shall be translated at exchange rates at the dates of the transactions; and

(c) all resulting exchange differences shall be recognised as income or as expenses in that previous year.

(2) Notwithstanding anything stated in sub-paragraph 1, translation and recognition of exchange difference in cases referred to in section 43A of the Act or Rule 115 of Income-tax Rules, 1962 shall be carried out in accordance with the provisions contained in that section or that Rule, as the case may be.

Change in the Classification of a Foreign Operation

10(1) When there is a change in the classification of a foreign operation, the translation procedures applicable to the revised classification should be applied from the date of the change in the classification.

(2) The consistency principle requires that foreign operation once classified as integral or non-integral is continued to be so classified. However, a change in the way in which a foreign operation is financed and operates in relation to the person may lead to a change in the classification of that foreign operation.

Forward Exchange Contracts

11. (1) Any premium or discount arising at the inception of a forward exchange contract shall be amortised as expense or income over the life of the contract. Exchange differences on such a contract shall be recognised as income or as expense in the previous year in which the exchange rates change. Any profit or loss arising on cancellation or renewal shall be recognised as income or as expense for the previous year.

(2) The provisions of sub-para (1) shall apply provided that the contract:

(a) is not intended for trading or speculation purposes; and

(b) is entered into to establish the amount of the reporting currency required or available at the settlement date of the transaction.

(3) The provisions of sub-para (1) shall not apply to the contract that is entered into to hedge the foreign currency risk of a firm commitment or a highly probable forecast transaction. For this purpose, firm commitment, shall not include assets and liabilities existing at the end of the previous year.

(4) The premium or discount that arises on the contract is measured by the difference between the exchange rate at the date of the inception of the contract and the forward rate specified in the contract. Exchange difference on the contract is the difference between:

(a) the foreign currency amount of the contract translated at the exchange rate at the last day of the previous year, or the settlement date where the transaction is settled during the previous year; and

(b) the same foreign currency amount translated at the date of inception of the contract or the last day of the immediately preceding previous year, whichever is later.

(5) Premium, discount or exchange difference on contracts that are intended for trading or speculation purposes, or that are entered into to hedge the foreign currency risk of a firm commitment or a highly probable forecast transaction shall be recognised at the time of settlement.

Transitional Provisions

12. (1) All foreign currency transactions undertaken on or after 1st day of April, 2015 shall be recognised in accordance with the provisions of this standard.

(2) Exchange differences arising in respect of monetary items or non-monetary items, on the settlement thereof during the previous year commencing on the 1st day of April, 2015 or on conversion thereof at the last day of the previous year commencing on the 1st day of April, 2015, shall be recognised in accordance with the provisions of this standard after taking into account the amount recognised on the last day of the previous year ending on the 31st March,2015 for an item, if any, which is carried forward from said previous year.

(3) The financial statements of foreign operations for the previous year commencing on the 1st day of April, 2015 shall be translated using the principles and procedures specified in this standard after taking into account the amount recognised on the last day of the previous year ending on the 31st March, 2015 for an item, if any, which is carried forward from said previous year.

(4) All forward exchange contracts existing on the 1st day of April, 2015 or entered on or after 1st day of April, 2015 shall be dealt with in accordance with the provisions of this standard after taking into account the income or expenses, if any, recognised in respect of said contracts for the previous year ending on or before the 31st March, 2015.

G. Income Computation and Disclosure Standard VII relating to government grants

Preamble

This Income Computation and Disclosure Standard is applicable for computation of income chargeable under the head “Profits and gains of business or profession” or “Income from other sources” and not for the purpose of maintenance of books of account.

In case of conflict between the provisions of the Income Tax Act, 1961 (‘the Act’) and this Income Computation and Disclosure Standard, the provisions of the Act shall prevail to that extent.

Scope

1. This Income Computation and Disclosure Standard deals with the treatment of Government grants. The Government grants are sometimes called by other names such as subsidies, cash incentives, duty drawbacks, waiver, concessions, reimbursements, etc.

2. This Income Computation and Disclosure Standard does not deal with:-

(a) Government assistance other than in the form of Government grants; and

(b) Government participation in the ownership of the enterprise.

Definitions

3(1) The following terms are used in the Income Computation and Disclosure Standard with the meanings specified:

(a) “Government” refers to the Central Government, State Governments, agencies and similar bodies, whether local, national or international.

(b) “Government grants” are assistance by Government in cash or kind to a person for past or future compliance with certain conditions. They exclude those forms of Government assistance which cannot have a value placed upon them and the transactions with Government which cannot be distinguished from the normal trading transactions of the person.

3(2) Words and expressions used and not defined in this Income Computation and Disclosure Standard but defined in the Act shall have the meaning assigned to them in the Act.

Recognition of Government Grants

4(1) Government grants should not be recognised until there is reasonable assurance that (i) the person shall comply with the conditions attached to them, and (ii) the grants shall be received.

4(2) Recognition of Government grant shall not be postponed beyond the date of actual receipt.

Treatment of Government Grants

5. Where the Government grant relates to a depreciable fixed asset or assets of a person, the grant shall be deducted from the actual cost of the asset or assets concerned or from the written down value of block of assets to which concerned asset or assets belonged to.

6. Where the Government grant relates to a non-depreciable asset or assets of a person requiring fulfillment of certain obligations, the grant shall be recognised as income over the same period over which the cost of meeting such obligations is charged to income.

7. Where the Government grant is of such a nature that it cannot be directly relatable to the asset acquired, so much of the amount which bears to the total Government grant, the same proportion as such asset bears to all the assets in respect of or with reference to which the Government grant is so received, shall be deducted from the actual cost of the asset or shall be reduced from the written down value of block of assets to which the asset or assets belonged to.

8. The Government grant that is receivable as compensation for expenses or losses incurred in a previous financial year or for the purpose of giving immediate financial support to the person with no further related costs, shall be recognised as income of the period in which it is receivable.

9. The Government grants other than covered by paragraph 5, 6, 7, and 8 shall be recognised as income over the periods necessary to match them with the related costs which they are intended to compensate.

10. The Government grants in the form of non-monetary assets, given at a concessional rate, shall be accounted for on the basis of their acquisition cost.

Refund of Government Grants

11. The amount refundable in respect of a Government grant referred to in paragraphs 6, 8 and 9 shall be applied first against any unamortised deferred credit remaining in respect of the Government grant. To the extent that the amount refundable exceeds any such deferred credit, or where no deferred credit exists, the amount shall be charged to profit and loss statement.

12. The amount refundable in respect of a Government grant related to a depreciable fixed asset or assets shall be recorded by increasing the actual cost or written down value of block of assets by the amount refundable. Where the actual cost of the asset is increased, depreciation on the revised actual cost or written down value shall be provided prospectively at the prescribed rate.

Transitional Provisions

13. All the Government grants which meet the recognition criteria of para 4 on or after 1st day of April, 2015 shall be recognised for the previous year commencing on or after 1st day of April, 2015 in accordance with the provisions of this standard after taking into account the amount, if any, of the said Government grant recognised for any previous year ending on or before 31st day of March, 2015.

Disclosures

14. Following disclosure shall be made in respect of Government grants, namely:-

(a) nature and extent of Government grants recognised during the previous year by way of deduction from the actual cost of the asset or assets or from the written down value of block of assets during the previous year;

(b) nature and extent of Government grants recognised during the previous year as income;

(c) nature and extent of Government grants not recognised during the previous year by way of deduction from the actual cost of the asset or assets or from the written down value of block of assets and reasons thereof; and

(d) nature and extent of Government grants not recognised during the previous year as income and reasons thereof.

H. Income Computation and Disclosure Standard VIII relating to securities

Preamble

This Income Computation and Disclosure Standard is applicable for computation of income chargeable under the head “Profits and gains of business or profession” or “Income from other sources” and not for the purpose of maintenance of books of account.

In the case of conflict between the provisions of the Income-tax Act, 1961 (‘the Act’) and this Income Computation and Disclosure Standard, the provisions of the Act shall prevail to that extent.

Scope

1. This Income Computation and Disclosure Standard deals with securities held as stock-in-trade.

2. This Income Computation and Disclosure Standard does not deal with:

(a) the bases for recognition of interest and dividends on securities which are covered by the Income Computation and Disclosure Standard on revenue recognition;

(b) securities held by a person engaged in the business of insurance;

(c) securities held by mutual funds, venture capital funds, banks and public financial institutions formed under a Central or a State Act or so declared under the Companies Act, 1956 (1 of 1956) or the Companies Act, 2013 (18 of 2013).

Definitions

3(1) The following terms are used in this Income Computation and Disclosure Standard with the meanings specified:

(a) “Fair value” is the amount for which an asset could be exchanged between a knowledgeable, willing buyer and a knowledgeable, willing seller in an arm’s length transaction.

(b) “Securities” shall have the meaning assigned to it in clause (h) of Section 2 of the Securities Contract (Regulation) Act, 1956 (42 of 1956), other than Derivatives referred to in sub-clause (1a) of that clause.

3(2) Words and expressions used and not defined in this Income Computation and Disclosure Standard but defined in the Act shall have the meaning respectively assigned to them in the Act.

Recognition and Initial Measurement of Securities

4. A security on acquisition shall be recognised at actual cost.

5. The actual cost of a security shall comprise of its purchase price and include acquisition charges such as brokerage, fees, tax, duty or cess.

6. Where a security is acquired in exchange for other securities, the fair value of the security so acquired shall be its actual cost.

7. Where a security is acquired in exchange for another asset, the fair value of the security so acquired shall be its actual cost.

8. Where unpaid interest has accrued before the acquisition of an interest-bearing security and is included in the price paid for the security, the subsequent receipt of interest is allocated between pre-acquisition and post-acquisition periods; the pre-acquisition portion of the interest is deducted from the actual cost.

Subsequent Measurement of Securities

9. At the end of any previous year, securities held as stock-in-trade shall be valued at actual cost initially recognised or net realisable value at the end of that previous year, whichever is lower.

10. For the purpose of para 9, the comparison of actual cost initially recognised and net realisable value shall be done categorywise and not for each individual security. For this purpose, securities shall be classified into the following categories, namely:-

(a) shares;

(b) debt securities;

(c) convertible securities; and

(d) any other securities not covered above.

11. The value of securities held as stock-in-trade of a business as on the beginning of the previous year shall be:

(a) the cost of securities available, if any, on the day of the commencement of the business when the business has commenced during the previous year; and

(b) the value of the securities of the business as on the close of the immediately preceding previous year, in any other case.

12. Notwithstanding anything contained in para 9, 10 and 11, at the end of any previous year, securities not listed on a recognised stock exchange; or listed but not quoted on a recognised stock exchange with regularity from time to time, shall be valued at actual cost initially recognised.

13. For the purposes of para 9, 10 and 11 where the actual cost initially recognised cannot be ascertained by reference to specific identification, the cost of such security shall be determined on the basis of first-in-first-out method.

This Income Computation and Disclosure Standard is applicable for computation of income chargeable under the head “Profits and gains of business or profession” or “Income from other sources” and not for the purpose of maintenance of books of account.

In the case of conflict between the provisions of the Income-tax Act, 1961 (‘the Act’) and this Income Computation and Disclosure Standard, the provisions of the Act shall prevail to that extent.

Scope

1. (1) This Income Computation and Disclosure Standard deals with treatment of borrowing costs.

(2) This Income Computation and Disclosure Standard does not deal with the actual or imputed cost of owners’ equity and preference share capital.

Definitions

2. (1) The following terms are used in this Income Computation and Disclosure Standard with the meanings specified:

(a) “Borrowing costs” are interest and other costs incurred by a person in connection with the borrowing of funds and include:

(i) commitment charges on borrowings;

(ii) amortised amount of discounts or premiums relating to borrowings;

(iii) amortised amount of ancillary costs incurred in connection with the arrangement of borrowings;

(iv) finance charges in respect of assets acquired under finance leases or under other similar arrangements.

(ii) know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature, being intangible assets;

(iii) inventories that require a period of twelve months or more to bring them to a saleable condition.

(2) Words and expressions used and not defined in this Income Computation and Disclosure Standard but defined in the Act shall have the meaning assigned to them in the Act.

Recognition

3. Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset shall be capitalised as part of the cost of that asset. The amount of borrowing costs eligible for capitalisation shall be determined in accordance with this Income Computation and Disclosure Standard. Other borrowing costs shall be recognised in accordance with the provisions of the Act.

4. For the purposes of this Income Computation and Disclosure Standard, “capitalisation” in the context of inventory referred to in item (iii) of clause (b) of sub-paragraph (1) of paragraph 2means addition of borrowing cost to the cost of inventory.

Borrowing Costs Eligible for Capitalisation

5. To the extent the funds are borrowed specifically for the purposes of acquisition, construction or production of a qualifying asset, the amount of borrowing costs to be capitalised on that asset shall be the actual borrowing costs incurred during the period on the funds so borrowed.

6. To the extent the funds are borrowed generally and utilised for the purposes of acquisition, construction or production of a qualifying asset, the amount of borrowing costs to be capitalised shall be computed in accordance with the following formula namely :-

A x = B / C

Where

A =

borrowing costs incurred during the previous year except on borrowings directly relatable to specific purposes;

B =

(i) the average of costs of qualifying asset as appearing in the balance sheet of a person on the first day and the last day of the previous year;(ii) in case the qualifying asset does not appear in the balance sheet of a person on the first day or both on the first day and the last day of previous year, half of the cost of qualifying asset;

(iii) in case the qualifying asset does not appear in the balance sheet of a person on the last day of previous year, the average of the costs of qualifying asset as appearing in the balance sheet of a person on the first day of the previous year and on the date of put to use or completion, as the case may be ,

other than those qualifying assets which are directly funded out of specific borrowings; or

C =

the average of the amount of total assets as appearing in the balance sheet of a person on the first day and the last day of the previous year, other than those assets which are directly funded out of specific borrowings;

Commencement of Capitalisation

7. The capitalisation of borrowing costs shall commence:

(a) in a case referred to in paragraph 5, from the date on which funds were borrowed;

(b) in a case referred to in paragraph 6, from the date on which funds were utilised.

Cessation of Capitalisation

8. Capitalisation of borrowing costs shall cease:

(a) in case of a qualifying asset referred to in item (i) and (ii) of clause (b) of sub-paragraph (1) of paragraph 2, when such asset is first put to use;

(b) in case of inventory referred to in item (iii) of clause (b) of sub-paragraph (1) of paragraph 2, when substantially all the activities necessary to prepare such inventory for its intended sale are complete.

9. When the construction of a qualifying asset is completed in parts and a completed part is capable of being used while construction continues for the other parts, capitalisation of borrowing costs in relation to a part shall cease:-

(a) in case of part of a qualifying asset referred to in item (i) and (ii) of clause (b) of sub-paragraph (1) of paragraph 2, when such part of a qualifying asset is first put to use;

(b) in case of part of inventory referred to in item (iii) of clause (b) of sub-paragraph (1) of paragraph 2, when substantially all the activities necessary to prepare such part of inventory for its intended sale are complete.

Transitional Provisions

10. All the borrowing costs incurred on or after 1st day of April, 2015 shall be capitalised for the previous year commencing on or after 1st day of April, 2015 in accordance with the provisions of this standard after taking into account the amount of borrowing costs capitalised, if any, for the same borrowing for any previous year ending on or before 31st day of March, 2015.

Disclosure

11. The following disclosure shall be made in respect of borrowing costs, namely:-

(a) the accounting policy adopted for borrowing costs; and

(b) the amount of borrowing costs capitalised during the previous year.

This Income Computation and Disclosure Standard is applicable for computation of income chargeable under the head “Profits and gains of business or profession” or “Income from other sources” and not for the purpose of maintenance of books of accounts.

In the case of conflict between the provisions of the Income-tax Act, 1961 (‘the Act’) and this Income Computation and Disclosure Standard, the provisions of the Act shall prevail to that extent.

(c) arising in insurance business from contracts with policyholders; and

(d) covered by another Income Computation and Disclosure Standard.

2. This Income Computation and Disclosure Standard does not deal with the recognition of revenue which is dealt with by Income Computation and Disclosure Standard – Revenue Recognition.

3. The term ‘provision’ is also used in the context of items such as depreciation, impairment of assets and doubtful debts which are adjustments to the carrying amounts of assets and are not addressed in this Income Computation and Disclosure Standard.

Definitions

4(1) The following terms are used in this Income Computation and Disclosure Standard with the meanings specified:

(a) “Provision” is a liability which can be measured only by using a substantial degree of estimation.

(b) “Liability” is a present obligation of the person arising from past events, the settlement of which is expected to result in an outflow from the person of resources embodying economic benefits.

(c) “Obligating event” is an event that creates an obligation that results in a person having no realistic alternative to settling that obligation.

(d) “Contingent liability” is:

(i) a possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the person; or

(ii) a present obligation that arises from past events but is not recognised because:

(A) it is not reasonably certain that an outflow of resources embodying economic benefits will be required to settle the obligation; or

(B) a reliable estimate of the amount of the obligation cannot be made.

(e) “Contingent asset” is a possible asset that arises from past events the existence of which will be confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the person.

(f) “Executory contracts” are contracts under which neither party has performed any of its obligations or both parties have partially performed their obligations to an equal extent.

(g) “Present obligation” is an obligation if, based on the evidence available, its existence at the end of the previous year is considered reasonably certain.

4(2) Words and expressions used and not defined in this Income Computation and Disclosure Standard but defined in the Act shall have the meaning respectively assigned to them in the Act.

Recognition

Provisions

5. A provision shall be recognised when:

(a) a person has a present obligation as a result of a past event;

(b) it is reasonably certain that an outflow of resources embodying economic benefits will be required to settle the obligation; and

(c) a reliable estimate can be made of the amount of the obligation.

If these conditions are not met, no provision shall be recognised.

6. No provision shall be recognised for costs that need to be incurred to operate in the future.

7. It is only those obligations arising from past events existing independently of a person’s future actions, that is the future conduct of its business, that are recognised as provisions

8. Where details of a proposed new law have yet to be finalised, an obligation arises only when the legislation is enacted.

Contingent Liabilities

9. A person shall not recognise a contingent liability.

Contingent Assets

10. A person shall not recognise a contingent asset.

11. Contingent assets are assessed continually and when it becomes reasonably certain that inflow of economic benefit will arise, the asset and related income are recognised in the previous year in which the change occurs.

Measurement

Best Estimate

12. The amount recognised as a provision shall be the best estimate of the expenditure required to settle the present obligation at the end of the previous year. The amount of a provision shall not be discounted to its present value.

13. The amount recognised as asset and related income shall be the best estimate of the value of economic benefit arising at the end of the previous year. The amount and related income shall not be discounted to its present value.

Reimbursements

14. Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement shall be recognised when it is reasonably certain that reimbursement will be received if the person settles the obligation. The amount recognised for the reimbursement shall not exceed the amount of the provision.

15. Where a person is not liable for payment of costs in case the third party fails to pay, no provision shall be made for those costs.

16. An obligation, for which a person is jointly and severally liable, is a contingent liability to the extent that it is expected that the obligation will be settled by the other parties.

Review

17. Provisions shall be reviewed at the end of each previous year and adjusted to reflect the current best estimate. If it is no longer reasonably certain that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision should be reversed.

18. An asset and related income recognised as provided in para 11 shall be reviewed at the end of each previous year and adjusted to reflect the current best estimate. If it is no longer reasonably certain that an inflow of economic benefits will arise, the asset and related income shall be reversed.

Use of Provisions

19. A provision shall be used only for expenditures for which the provision was originally recognised.

Transitional Provisions

20. All the provisions or assets and related income shall be recognised for the previous year commencing on or after 1st day of April, 2015 in accordance with the provisions of this standard after taking into account the amount recognised, if any, for the same for any previous year ending on or before 31st day of March, 2015.

Disclosure

21(1) Following disclosure shall be made in respect of each class of provision, namely:-

(a) a brief description of the nature of the obligation;

(b) the carrying amount at the beginning and end of the previous year;

(c) additional provisions made during the previous year, including increases to existing provisions;

(d) amounts used, that is incurred and charged against the provision, during the previous year;

(e) unused amounts reversed during the previous year; and

(f) the amount of any expected reimbursement, stating the amount of any asset that has been recognised for that expected reimbursement.

21(2) Following disclosure shall be made in respect of each class of asset and related income recognised as provided in para 11, namely:-

(a) a brief description of the nature of the asset and related income;

(b) the carrying amount of asset at the beginning and end of the previous year;

(c) additional amount of asset and related income recognised during the year, including increases to assets and related income already recognised; and

(d) amount of asset and related income reversed during the previous year.

Your reference is invited to the fact that the Directorate of Income Tax (O & MS) is the nodal agency for setting up of Aayakar Sewa Kendras (ASKs) all over the country. Last year, we had a target of setting up 60 ASKs. It was felt by us that before identifying a particular location for setting up of a new ASK, the concerned CCIT should be consulted to avoid any communication gap at a later stage.

2. The locations for setting up all the ASKs in the last year were identified and recommended by the concerned CCIT (CCA) / CCIT, as a result of which the process of setting up of the ASKs could be carried out smoothly. On the same lines as last year, you are requested to kindly use your good offices to participate in the exercise to identify locations for setting up Aayakar Sewa Kendra in this year also.

3. A number of yardsticks have been identified by the CBDT for setting up a new Aayakar Sewa Kendra. A copy of these yardsticks is enclosed as Annexure-A. Another important factor which needs to be taken into account while setting up an Aayakar Sewa Kendra is that the building should preferably be owned by the Government. In case no such buildings are available, a building which has been taken on rent by the Income Tax Department and which is not likely to be vacated soon, may also be considered.

4. You are kindly requested to kindly coordinate amongst the CCsIT in your region and recommend 5 buildings in your region for setting up of the new Aayakar Sewa Kendra during the Financial Year 2015-16. Priority may kindly be given to buildings where CIT is the senior most officer and it may kindly be seen that no such building is left out unless there is any compelling reason.

5. The primary requirements for setting up an ASK is the Sevottam node and the appropriate budget. The number of nodes required to setup an ASK is based on the workload in that location. The procedure to determine the same is explained in the annexure appended to this letter. Therefore, once the buildings are identified at your end, you are requested to kindly determine the requirement of nodes for each of the buildings identified. It may however be kindly noted that for single ITO stations, only 1 node shall be applicable.

6. Once you have identified the requirement of nodes, you are also requested to submit your required budget for each of the ASKs recommended by you. As far as the budget is concerned, depending upon the number of nodes and going by the pattern of expenditure in the previous years, the budget for setting up an ASK is also mentioned in the annexure. It is seen that ASKs have already been setup in most of the big locations and the ASKs being setup now are mostly with 3 nodes. The budget estimates enclosed are therefore based on ASKs with a maximum of 5 nodes since it is unlikely to be exceeded.

7. Kindly appreciate that setting up of ASK is a time bound exercise and funds are to be disbursed at the earliest for its timely completion. I shall be grateful if you kindly send your list of 5 Aayakar Sewa Kendras proposed to be set up during the Financial Year 2015 -16 latest by 15-04-2015 alongwith the requirement of nodes and budget in respect of each recommended building.

With Yours

(K. C Jain)

Encl: As above

Annexure-A

YARDSTICKS & BUDGET FOR SELECTION OF ASK LOCATIONS

1. Ask Locations should preferably be in Govt. Owned buildings. However, in charges, where no govt. owned building is available for setting up of ASK, rented building which is for a longer period of time may be identified.

2. ASK should preferably be set-up on Ground Floor and in the front side of the office building. However, this yardstick is flexible depending on the requirement.

3. The requirement of space for ASK is determined on the basis of requirement of nodes for ASK based on workload of receipt of DAK and receipt of paper returns in that building. Broad basis for working out requirement of nodes/space is enclosed.

4. In single ITO stations, there is no need to set-up ASK Prototype. However, ASK may be made functional at these locations with a single node for monitoring of services given in the Citizen’s Charter.

5. For technical feasibility, the location for ASK should preferably be within 100 meters distance from the server/communication room

6. A Local Implementation Committee (with concerned CIT/Addl.CIT as Nodal Officer) may be set-up to identify space, to initiate all work relating to setting up of ASK and also monitoring the functioning of ASK.

7. The budget for setting up ASK with upto 5 nodes is also enclosed.

Basis of determining number of nodes/Requirement of space/Budget at ASK Centres

1. The requirement of number of nodes at ASK centers is equal to the number of Front Desks plus the number of Back Desks. In addition one node is also required for the person manning Enquiry counter. Hence, it is important to work out the requirement of Front Desks and Back Desks at ASK Centres which would ultimately be the requirement of nodes. The basis of working out requirements for Front Desk and Back Desk are given below:-

Requirement of Front Desk for Receipt of Dak/ Return of Income

a) There are approximately 200 working days in a year.

b) One person manning Front Desk can receive 200 Dak OR Returns of income

in a day which works out to 40,000/- Dak OR return per Front Desk per year.

c) The work for Front Desk is not scattered evenly. Sometimes during the day there is a great rush and some times there are only few persons availing services at ASK. In view of this, for initial block of 20,000/- returns or dak, one Front Desk is absolutely necessary. For next three block of 30,000, 40,000 and 50,000 one Front Desk for each of the block is required. These three blocks average full utilization of time for Front Desks.

Requirement of Back Desks for Receipt of Returns:

As for requirement of Back Desk is concerned, the basis for working out this requirement is different for Returns of Income and Dak As per Process Document, for receipt of returns, back desk has not much work except to generate RDR to distribute Returns of Income to the respective assessing officers. Hence for functional necessity only one Back Desk is sufficient irrespective of the workload of receipt of returns at ASK Centre.

Requirement of Back Desks for Receipt of Dak:

As per Process Document, Back Desk has to make some entries for the dak which is passed on to him by the Front Desk before the same is distributed to the respective AOs/Sections. As and when the workload of receipt of dak with Front dak increase, it has a bearing on Back Desk. Hence for initial block of upto 50,000 Dak, requirement of one Back Desk is a functional necessity. For next two block of 40,000 and 50,000, one Back Desk for each of the block is required. After that for every block of 30,000, 40,000 and 50,000, one additional Back Desk is required. It is pertinent to mention here that the Back Desk is also responsible to handle dak received through post/courier/drop box for which he has to carry out both the functions i.e. functions of FD as well as functions of BD, as this dak is not routed through the Front Desk, required to make all entries in the system.

2. The workload for ASK for Receipt of Returns of Income/Dak is determined on the following basis:

Workload for Receipt of Returns:

It has been the experience of the Department that 60 per cent of the Paper Returns of Income are received in the months of March/July. The balance 40% returns of income are received in rest of the year. In any case to cater to the rush period of March/July, the department is already making alternative arrangements which would still continue. Hence the effective workload for receipt of paper returns for ASK centres remains only 40 per cent of the total returns received by all the assessing officers housed in the building where ASK is made functional.

Workload for Receipt of Dak

Unlike returns of income, there is no rush period identified for dak. Hence the total dak received by all the assessing officers/other officers housed in the building where ASK is functional is the effective workload.

3. On the above basis, following ready reckoner is prepared for working out requirement of nodes:

Requirement of Nodes for Receipt of Returns of Income

Effective Workload

Requirement of Nodes

FD

BD

Up to 20,000 returns

1

1

Next 30,000 returns i.e. 50,000

2

1

Next 40,000 returns i.e. 90,000

3

1

Next 50,000 returns i.e. 1,40,000

4

1

Next 30,000 returns i.e. 1,70,000

5

1

Next 40,000 returns i.e. 2,10,000

6

1

Next 50,000 returns I.e. 2,60,000

7

1

And so on

Requirement of Nodes for Receipt of Daks

Effective Workload

Requirement of Nodes

FD

BD

Up to 20,000 Dak

1

1

Next 30,000 dak i.e. 50,000

2

1

Next 40,000 dak i.e. 90,000

3

2

Next 50,000 dak i.e. 1,40,000

4

3

Next 30,000 dak i.e. 1,70,000

5

4

Next 40,000 dak i.e. 2,10,000

6

5

Next 50,000 dak I.e. 2,60,000

7

6

And so on

Apart from the above, one additional node is required at each ASK Centre for “May I Help You” Counter.

Requirement of approximate area required for ASK

Sl. No.

Number of Nodes worked out for ASK (including ‘May I Help You’ counter)

G.S.R. (E). - In exercise of the powers conferred by sections 73 and 76 read with sub-section (1) of section 469 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules further to amend the Companies (Acceptance of Deposits) Rules, 2014, namely:-

1. (1) These rules may be called the Companies (Acceptance of Deposits) Amendment Rules, 2015.

(2) They shall come into force from the date of their publication in the Official Gazette.

2. In the Companies (Acceptance of Deposits) Rules, 2014,

(1) in rule 2, in sub-rule (1), in clause (c),

(a) in sub-clause (vii), in Explanation (a), the following proviso shall be inserted, namely:-

“Provided that unless otherwise required under the Companies Act, 1956 (1 of 1956) or the Securities and Exchange Board of India Act, 1992 (15 of 1992) or rules or regulations made thereunder to allot any share, stock, bond, or debenture within a specified period, if a company receives any amount by way of subscriptions to any shares, stock, bonds or debentures before the 1st April, 2014 and disclosed in the balance sheet for the financial year ending on or before the 31stMarch, 2014 against which the allotment is pending on the 31st March, 2015, the company shall, by the 1st June 2015, either return such amounts to the persons from whom these were received or allot shares, stock, bonds or debentures or comply with these rules.”

(b) in sub-clause (xii), in item (b),

(A) for the words “consideration for property”, the words “consideration for an immovable property” shall be substituted;

(B) for the words “against the property”, the words “against such property” shall be substituted;

(c) in sub-clause (xii), in the Explanation, for the words “referred to in the first proviso”, the words “referred to in the proviso” shall be substituted;

(2) in rule 3, after sub-rule (7), the following sub-rule shall be inserted, namely:-

“(8) Every eligible company shall obtain, at least once in a year, credit rating for deposits accepted by it in the manner specified herein below and a copy of the rating shall be sent to the Registrar of Companies alongwith the return of deposits in Form DPT-3;

Name of the agency

Minimum investment Grade Rating

(a) The Credit Rating Information Services of India Ltd

FA- (FA Minus)

(b) ICRA Ltd.

MA- (MA Minus)

(c) Credit Analysis and Research Ltd.

CARE BBB(FD)

(d) Fitch Ratings India Private Ltd.

tA-(ind) (FD)

(e) Brickwork Ratings India Pvt Ltd.

BWRFA

(f) SME Rating Agency of India Ltd.

SMERA A”

(3) in rule 5, in sub-rule (1), for the proviso, the following proviso shall be substituted, namely:-

“Provided that the companies may accept deposits without deposit insurance contract till the 31st March, 2016 or till the availability of a deposit insurance product, whichever is earlier.”

(4) in Annexure, for Form “DPT-3″ the following form shall be substituted, namely:-

Form DPT-3

Return of deposits

[Pursuant to rule 16 of the Companies (Acceptance of Deposits) Rules, 2014]

1. (a) CIN:

(b) GLN:

2. (a) Name of the company:

(b) Registered office address:

(c) E-mail Id:

3. Whether the company is

Public company

Private company

4. Whether the company is a Government company:

YES

NO

5. Objects of the company:

6. (a) Date of issue of advertisement or circular:

(b) Date of last closing of accounts:

(c) Date of expiry of validity of advertisement or circular:

7. Net Worth as per the latest audited balance sheet preceding the date of the return-

(a) (i) Paid up share capital

(ii) Free reserves

(b) (i) Accumulated loss

(ii) Balance of deferred revenue expenditure

(iii) Accumulated unprovided depreciation

(iv) Miscellaneous expense and preliminary expenses

(v) Other intangible assets

(c) Net worth (a-b)

(d) Maximum limit of deposits (i.e., 35% of the above in case of Government Company or 25% in case of others)

8. Particulars of deposits(to be furnished in respect of deposits from shareholders and others separately)

(a) Amount of existing deposits as at 1st April

(b) Amount of deposits accepted or renewed during the year

(i) Secured deposits

(ii) Unsecured deposits

(c) Amount of deposits repaid during the year

(d) Balance of deposits outstanding at the end of the year (a+b-c)

9. Details of outstanding deposits:

Particulars

Date of receipt of deposit

Rate of interest

Repayable after…….

10.(a) Amount of deposits that have matured but not claimed:

(b) Amount of deposits that have matured and claimed but not paid:

11. Particulars of liquid assets

(a) Amount of deposits maturing before 31st March next year and following next year:

(b) Amount required to be invested in liquid assets:

(c) Details of liquid assets-

Date of investment/ deposit

Amount

(a) Amount in current or other deposits account, free from charge or lien, with any scheduled bank

(b) Unencumbered securities of Central/State Government

Face value

Market value

(c) Unencumbered trust securities

Face value

Market value

12. Particulars of deposit insurance:

(a) Date of entering into deposit insurance contract

(b) Name of the insurer

(c) Premium payable

(d) Premium paid upto:

(e) Maximum ceiling limit for every depositor

13. Particulars of charge

(a) Date of entering into trust deed

(b) Name of the trustee

(c) Short particulars of the property on which charge is created for securing depositors

(d) Value of the property

14. Credit Rating obtained

From:___________

Rating:__________

Signature

Date:

Place:

Attachment:

1. Auditor’s certificate;

2. Deposit insurance contract;

3. Copy of trust deed;

4. Copy of instrument creating charge;

5. List of depositors indicating name, address, amount deposited, repaid during the year and outstanding, interest due, paid and payable as at the close of the Financial Year and separately indicating deposits not yet matured, matured, claimed and paid and matured, claimed but not paid and matured but not claimed for payment. List of deposits matured, cheques issued but not yet cleared to be shown separately.

6. Copy of rating obtained.

7. Optional attachment, if any.

[File No 1/8/2013-CL-V]

Amardeep Singh Bhatia

Joint Secretary to the Government of India

Note. - The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, sub-section (i), vide number G.S.R. 256(E), dated the 31st March, 2014 and were subsequently amended vide number G.S.R. 386(E), dated the 6th June, 2014.

S.O. (E).- In exercise of the powers conferred by section 458 of the Companies Act, 2013 (18 of 2013), the Central Government hereby delegates to the Regional Directors at Mumbai, Kolkata, Chennai, Noida, Ahmedabad, Hyderabad and Shillong, the powers and functions vested in it undersub-section (5) of section 94 of the Companies Act, 2013, subject to the condition that the Central Government may revoke such delegation of powers or may itself exercise the powers under the said sub-section, if in its opinion such a course of action is necessary in the public interest.

2. This notification shall come into force with effect from the date of its publication in the Official Gazette.

[F. No. 1/6/2014-CL-V]

AMARDEEP SINGH BHATIA

Joint Secretary

89 dated 27-03-2015

RBI//2014-15/518

A.P. (DIR Series) Circular No.89

March 27, 2015

To

All Category – I Authorised Dealer Banks

Madam / Sir,

Exim Bank’s Line of Credit of USD 2.712 million to the Banco Exterior De Cuba

Export-Import Bank of India (Exim Bank) has entered into an Agreement dated September 2, 2014 with the Banco Exterior De Cuba, for making available to the latter, a Line of Credit (LOC) of USD 2.712 million (USD Two Million and Seven Hundred and Twelve Thousand) for financing the setting up of a bulk blending fertilizer plant in the Republic of Cuba. The goods, machinery, equipment and services including consultancy services from India for exports under this Agreement are those which are eligible for export under the Foreign Trade Policy of the Government of India and whose purchase may be agreed to be financed by the Exim Bank under this Agreement. Out of the total credit by Exim Bank under this Agreement, the goods and services including consultancy services of the value of at least 75 per cent of the contract price shall be supplied by the seller from India and the remaining 25 percent goods and services may be procured by the seller for the purpose of eligible contract from outside India.

2. The Credit Agreement under the LOC is effective from February 27, 2015. Under the LOC, the last date for opening of Letters of Credit and Disbursement will be 48 months from the scheduled completion date(s) of contract(s) in the case of project exports and 72 months from the execution date of the Credit Agreement in the case of supply contracts.

3. Shipments under the LOC will have to be declared on EDF/ SDF Forms as per instructions issued by the Reserve Bank from time to time.

4. No agency commission is payable under the above LOC. However, if required, the exporter may use his own resources or utilize balances in his Exchange Earners’ Foreign Currency Account for payment of commission in free foreign exchange. Authorised Dealer Category- l (AD Category-l) banks may allow such remittance after realization of full payment of contract value subject to compliance with the prevailing instructions for payment of agency commission.

5. AD Category-I banks may bring the contents of this circular to the notice of their exporter constituents and advise them to obtain full details of the Line of Credit from the Exim Bank’s office at Centre One, Floor 21, World Trade Centre Complex, Cuffe Parade, Mumbai 400 005 or log on towww.eximbankindia.in.

6. The Directions contained in this circular have been issued under sections 10(4) and 11(1) of theForeign Exchange Management Act (FEMA), 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

The seemingly endless wait for getting your income tax refund could soon come to an end. Coming to the aid of taxpayers, Prime Minister Narendra Modi has expressed dissatisfaction with the Central Board of Direct Taxes for harassing taxpayers and has directed taxmen to addressall public grievances on a priority.

The issue is understood to have been taken up last week when the Prime Minister held a video-conferencing meeting with revenue secretary Shaktikanta Das and CBDT chairperson Anita Kapur.

“During the meeting, the PM expressed dissatisfaction about delays in responding to public grievances by our officers as well as the harassment meted out to the tax payers and officious behaviour of our officers,” Kapur said in a missive to principal chief commissioners and principal DGs of the CBDT.

“He (Prime Minister) was assured that redressal of all public grievances is one of our priority areas in the interim Central Action Plan for the first quarter of the financial year 2015-16,” she further said.

Accordingly, the income tax department has now worked out timelines for addressing all outstanding concerns of tax payers. It plans to resolve all public grievances pending for more than a year from March 31, 2015 by April 30 and those pending for more than 60 days by June 7.

With the PM expected to personally monitor the issue on a monthly basis, the CBDT may also conduct special drives to dispose of all pending grievances.

“Any breach of the timeline will be viewed seriously and accountability will be required to be fixed for such failure,” the CBDT chairperson has further warned.

The move comes at a time when the government is trying to create a tax friendly regime for investors while easing the compliance burden for individual taxpayers.

Source : PTI

05/2015 dated 30-03-2015

Amounts received by private companies from their members, directors or their relatives before 1st April, 2014 – Clarification regarding applicability of Companies (Acceptance of Deposits) Rules, 2014 – Dated 30-3-2015 – Companies Law

General Circular No. 05/2015

F. No. 1/8/2013-CL-V

Government of India

Ministry of Corporate Affairs

5th Floor, A Wing, Shastri Bhavan,

Dr R.P. Road, New Delhi.

Dated: 30th March, 2015

To

All Regional Directors,

All Registrars of Companies,

All stakeholders.

Subject: Amounts received by private companies from their members, directors or their relatives before 1st April, 2014 – Clarification regarding applicability of Companies (Acceptance of Deposits) Rules, 2014

Sir,

Stakeholders have sought clarifications as to whether amounts received by private companies from their members, directors or their relatives prior to 1st April, 2014 shall be considered as deposits under the Companies Act, 2013 as such amounts were not treated as ‘deposits’ under section 58A of the Companies Act, 1956 and rules made thereunder.

2. The matter has been examined in consultation with RBI and it is clarified that such amounts received by private companies prior to 1st, April, 2014 shall not be treated as `deposits’ under theCompanies Act, 2013 and Companies (Acceptance of Deposits) Rules, 2014 subject to the condition that relevant private company shall disclose, in the notes to its financial statement for the financial year commencing on or after 1st April, 2014 the figure of such amounts and the accounting head in which such amounts have been shown in the financial statement.

3. Any renewal or acceptance of fresh deposits on or after 1st April, 2014 shall, however, be in accordance with the provisions of Companies Act, 2013 and rules made thereunder.

4. This issues with the approval of the competent authority.

Yours faithfully,

(K.M.S. Narayanan)

Assistant Director (Policy)

Copy to:- 1. e-Governance Section and web contents Officer to place this circular on the Ministry website.

Subject: Standardization of procedures, practices and forms in all zones

Sir/Madam,

For ensuring standardization of practices, procedures and forms in all Zones across the country, all Zones are requested to host the formats of following applications/reports concerning Developers/Units for information of all concerned. From 1-11-2014, applications in all zones for these activities shall be received online through the module developed by NSDL:

List of Applications for Developer

a) Application for approval of Authorized operations (Form C7)

b) Application for extension of the validity period of Forma Letter of Approval (Form C1)

c) Application for Extension of the validity period of in-principle Letter of Approval (Form C2)

d) Application for approval of Job-work (sub-contracting)

e) Quarterly/half-yearly returns (Form E)

List of applications for Developer/Unit:

a) Application for setting up units in SEZs

b) Application for Renewal of LoA

c) Application for intimation of Jewellery exhibitions abroad

d) Application for permission of Jewellery exhibitions abroad.

e) Application for permission for setting up a DR/BCP centre by IT units

f) Application for permission for movement of data backup tape by IT units

NEW DELHI: “The Goods and Services Tax will be mutually beneficial for both the states and the Centre. I am hopeful of all stake-holders arriving at an amicable negotiated decision on the implementation of the GST regime within the 1, April, 2016 deadline”, said Kerala’s Finance Minsiter KM Mani, the newly appointed chairman of the empowered committee of state finance ministers on GST.

Talking to ET, Mani said, “I take my new assignment with a great sense of responsibility and I, as the chairman of the empowered committee, will always work by the principle of consensus-building”.

When pointed out how political considerations had always thrown a spanner in the works in moving towards GST as was demonstrated in the attitude of some BJP led state governments during the UPA rule, Mani said, “I would rather look forward with hope. I am aware that most of the states are aware of the benefits they will get from GST. Of course, there are also different perspective as far as the producing and non-producing states are concerned. But all stakeholders are also aware that the GST will help the states that have, otherwise, no powers to levy taxes on services and the Centre which has no powers to levy sales taxes. That is why I say, GST would be of mutual benefits for both the states and the Centre.

On some of the tasks he foresees as chairman of the empowered committee, Mani said, “as the chairman of the empowered committee, I am no one to make any unilateral decisions. With my past experience in the committee as in understanding the concerns of many states, I think many of the differences could be hammered out by enabling wider and constructive discussions on the draft GST bill among all stake holders”.

Source : PTI

Notification No.30/2015 dated 24-03-2015

[To be published in the Gazette of India, Extraordinary,

Part-II, Section 3, Sub-section (ii)]

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

NOTIFICATION NO. 30/2015

New Delhi, the 24th March, 2015

S.O. (E)-In exercise of the powers conferred by clause (46) of section 10 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies for the purposes of the said clause, “Chhattisgarh Building and Other Construction Workers’ Welfare Board”, a Board constituted by the Government of Chhattisgarh in respect of the following specified income arising to that Board, namely:-

(a) workers welfare cess;

(b) interest income; and

(c) registration fee.

2. This notification shall be applicable for the financial years 2013-14 to 2017-18.

3. The notification shall be effective subject to the conditions that Chhattisgarh Building and Other Construction Workers’ Welfare Board-

(a) does not engage in any commercial activity;

(b) its activities and the nature of the specified income remain unchanged throughout the financial years; and

(c) It files return of income in accordance with the provision of clause (g) of sub-section (4C) of section 139 of the said Act.

[F.No.196/06/2014-ITA.I]

DEEPSHIKHA SHARMA

Director to the Government of India

PM Narendra Modi appeals to well off people to give up subsidised LPG : 27-03-2015

Prime Minister Narendra Modi today appealed to the well off people to give up subsidised cooking gas, and expressed his government’s resolve to reduce dependence on energy imports by 10 per cent by 2022.

Sharing oil companies’ plans to increase piped cooking gas connection to one crore households from 27 lakh currently in the next four years, Modi said the decision to surrender LPG subsidy by 2.8 lakh consumers would result in a savings of Rs 100 crore.

“I had made a small mention about giving up LPG subsidy. As many as 2.80 lakh people has responded positively…and this will lead to a saving of at least Rs 100 crore. This Rs 100 crore can be utilised for the welfare of poor”, Modi said while speaking at the ‘Urja Sangam’ here.

Since the government started the new scheme of direct benefit transfer (DBT) for cooking gas, several persons opted out of the subsidy scheme.

Modi said that 12 crore bank accounts opened under the Jan Dhan scheme are being used for transferring subsidies directly to the consumers which has helped in plugging the leakages and effectively fighting corruption.

“To fight corruption, if institutional mechanism, transparent mechanism, policy driven system can be put in place then we can prevent leakages. And this has been proved by cash transfer,” the Prime Minister said.

Referring to India’s 77 per cent dependence on energy imports, Modi said the effort should be to reduce it by 10 per cent by 2022, when India will celebrate 75 years of Independence.

“We can reduce this import by at least 10 per cent in 2022. This 10 per cent we will produce ourselves and this should be our dream.

“If we become successful in reducing import by 10 per cent in 2022, by achieving 10 per cent growth in domestic production, then I can assure you that by 2030 we can reduce this import to 50 per cent,” he added.

Modi said the country needs to increase domestic output of energy to reduce dependence on imports.

“Our target has to be higher, only then we can reduce the import…for that we have to make effort,” he said, adding that the domestic energy companies should aim to become multinationals.

Most of the public and private companies are operating within the country and they need to look out and tap the energy market which is global, the Prime Minister said.

“These days energy diplomacy is a new area. In global relations energy diplomacy has become a requirement. The more our companies become multinational, the more we can increase our reach and space in this sector,” he added.

He also underlined the need to strengthen institutional mechanism to deal with the future problems of the energy sector.

Modi said he hoped that the country’s young population and the government’s focus on skill development would help in dealing with the challenges in the energy sector.

Observing that 12 crore bank accounts under the Jan Dhan scheme were opened in 100 days, he said that this “Jan Dhan has become Jan Shakti” with the government transferring subsidy directly into these accounts.

Recalling initiatives taken by the government in the energy sector, he said diesel prices have been deregulated and 5-kg cylinder was launched for the benefit of poor as well as the students.

The government, Modi said, was also encouraging blending of ethanol with petrol as it would some relief to the sugar sector which is facing glut.

The farmers, he added, would be encouraged to use barren land to grow jethropha which is used in manufacturing biodiesel.

G.S.R. 235(E).-In exercise of the powers conferred by the proviso to article 309 of the Constitution, and in supersession of the Settlement Commission (Income-tax/Wealth-tax) (Recruitment and Conditions of service of Chairman, Vice-Chairmen and Members) Rules, 2000, except as respects things done or omitted to be done before such supersession, the President hereby makes the following rules regulating the recruitment and conditions of service of persons appointed as Chairman, Vice-Chairmen and Members of the Settlement Commission (Income-tax/Wealth-tax), namely :-

1. Short title and Commencement.- (1) These rules may be called the Settlement Commission (Income-tax and Wealth-tax) (Recruitment and Conditions of Service of Chairman, Vice-Chairmen and Members) Rules, 2015.

(2) They shall come into force on the date of their publication in the official Gazette.

(d) “Commission” means the Settlement Commission (income-tax and Wealth-tax) constituted undersection 245B of the Income Tax Act, 1961 (43 of 1961) and Section 22B of the Wealth Tax Act, 1957 (27 of 1957).

3. Qualifications for recruitment and method of recruitment.-(i) The appointment to the posts of Chairman, Vice Chairmen and Members specified in column (2) of the Table below shall be made from amongst the officers specified in the corresponding entry in column (3) of the said Table.

TABLE

S. No.

NAME OF THE POST

FIELD OF SELECTION

1.

Chairman

From amongst the serving Members of the Commission, having minimum remaining service of six months on the date of occurrence of the vacancy for the post of the Chairman

2.

Vice-Chairman

Senior most Member of every Bench, other than the Principal Bench, shall be deemed to be the Vice-chairman of the respective Bench.

3.

Member

Serving Chief Commissioners or Principal Chief Commissioners or Principal Commissioner of Income-tax or of equivalent rankNote : The officer should be in service on the date of occurrence of the vacancy.

(2) Appointment of the Chairman, Vice-Chairmen and Members shall be made by the Central Government on the recommendation of a Selection Committee comprising of the Cabinet Secretary, Secretary in charge of the Department of Revenue and Secretary Department of Personnel and Training.

4. Retirement from parent service on appointment as Chairman or Vice-Chairman or Member.–

(1) Where, a Member, on the date of his appointment to the Commission, was in service under the Central Government, be shall seek retirement from such service before joining the Commission, and shall be deemed to have so retired on the date of his joining the Commission.

(2) On retirement as specified under sub-rule (1), the Member

(i) shall be entitled to receive pension, gratuity and commutation of pension in accordance with the retirement rules applicable to him;

(ii) shall not be allowed to carry forward his earned leave but shall be entitled to receive cash equivalent of leave salary, if any, in accordance with the rules applicable to him prior to his retirement;

(iii) shall, on the expiry of the term of his office in the Commission, whether as Member or in continuation as Vice Chairman or Chairman, as the case may be, be entitled to receive cash equivalent to leave salary in respect of the earned leave standing to his credit subject to the condition that the maximum of leave encashed under this sub-rule and at the time of retriement from previous service, taking together, shall not in any case exceed three hundred days.

5. Remuneration, allowances etc. of the Chairman, Vice-Chairmen and Members of the Commission.-(I)The pay scales of the Chairman, Vice-Chairman and Member shall be as specified below, namely :-

Chairman - ₹ 80,000/- (fixed) per mensem

Vice-Chairman - ₹ 67,000-79,000/- (annual increment @ 3%) per mensem

Member - ₹ 67,000-79,000/- (annual increment @ 3%) per mensem

(2) In addition to the salary as specified under sub-rule (1), the Chairman, a Vice-Chairman or a Member shall be entitled to draw such allowances as are admissible to a Group `A’ Central Government Officer of equivalent grade.

Provided that if the Chairman, a Vice-Chairman or a Member is in receipt of pension in respect of any previous service under the Government, such salary shall be reduced by the amount of pension and pension equivalent of gratuity or any other form of retirement benefits.

6. Contribution of General Provident Fund.- The Chairman, Vice-Chairmen and Members shall be entitled to make contributions towards General Provident Fund Account under the General Provident Fund (Central Services) Rules, 1960 in the same manner as any other Central Government Servants.

7. Tenure. A person appointed as the Chairman or a Vice-Chairman or a Member shall hold office for a period of five years or till he attains the age of sixty-two years, whichever is earlier, and shall not be entitled for reappointment.

Provided that a serving Vice-Chairman or a Member shall be eligible for appointment as Chairman or Vice Chairman in the Commission, subject to the condition that his total service in the Commission shall not exceed five years or his age shall not exceed sixty-two years, whichever is earlier :

Provided further that the Chairman, Vice-Chairman or Members of the Commission shall serve the Commission at least for two years before they are appointed to any new assignment, if any.

Note : The Chairman, Vice-Chairmen or Members of the Commission may apply for any other post but they cannot accept any new assignment before the completion of two years of service in the Commission.

8. Other conditions of service.-The conditions of service of the Chairman, Vice-Chairman and Members in respect of leave, travelling allowances, leave travel concession, accommodation, conveyance, medical facilities and matters for which no provision is made in these rules, shall be the same as may be applicable to other Group ‘A’ officers of the Government of India of equivalent grade.

9. Interpretation.-If any question arises relating to the interpretation of these rules, the decision of the Central Government thereon shall be final.

10. Power to relax.-Where the Central Government is of opinion that it is necessary or expedient so to do, it may by order for reasons to be recorded in writing, relax any of the provisions of these rules with respect to any class or category of persons.

The Principal Chief Commissioners/Chief Commissioners of Central Excise and Service Tax (All),

The Director General of Service Tax,

The Director General of Systems & Data Management,

The Director General of Central Excise Intelligence,

The Commissioners of Service Tax (Audit) (All)

The Commissioners of Central Excise (Audit) (All)

Subject: Extension of e-payment deadline and of banking hours

The Reserve Bank of India has issued instructions vide RBI/2014-15/515 dated March 25, 2015wherein it has been decided that all agency banks shall keep the counters of their designated branches conducting government business open for full day on March 30, 2015, and till 8.00 p.m. on March 31, 2015. All electronic transactions would, however, continue till midnight of March 31, 2015.

2. Thus the assessees can make e payment till the mid night of March 31, 2015.

3. It is requested that the trade notice may be issued to publicize the extended e payment hours as well as the extended banking hours.

F. No . 137/155/2012-Service Tax ( Pt -II)

(Rajeev Yadav)

Director (Service Tax)

F. No.224/44/2014-CX.6 dated 27-03-2015

Procedure for use of digital signature on records and invoices-reg. – Dated 27-3-2015 – Central Excise

Sub: Procedure for use of digital signature on records and invoices-reg.

Madam/ Sir,

Kind attention is drawn to Hon’ble Finance Minister’s Budget Speech on the facility of maintenance of records in electronic form and authentication of records by Digital Signature for Central Excise assesses. Sub rule (4), (5) in Rule 10 and sub-rule (8), (9) in Rule 11 of Central Excise Rules, 2002 have been inserted vide Notification No. 8/2015-CE (N.T.) dated 01.03.2015 to initiate the implementation of the said facility.

2. Central Board of Excise and Customs (Board) has been empowered in these rules to specify the conditions, safeguards and procedures for issue of invoices and preserving records in electronic form and authentication of records and invoices by digital signatures.

3. Board now proposes to prescribe the procedure for verification of digitally signed invoices and documents. A draft Notification and Circular proposed to be issued in this regard, is enclosed. It is requested that feedback may be provided by the departmental officers and the Members of Trade on the proposed procedure by 22nd April, 2015 on the email id: rohan.choudhary@nic.in.

Section 9 of the Income-tax Act provides for incomes which are deemed to accrue or arise in India. Clause (i) of sub-section (1) of the said section reads as under:-

“9. (1) The following incomes shall be deemed to accrue or arise in India:-

(i) all income accruing or arising, whether directly or indirectly, through or from any business connection in India, or through or from any property in India, or through or from any asset or source of income in India, or through the transfer of a capital asset situate in India.”

2. The Finance Act, 2012 inserted Explanation 5 to clause (i) of sub-section (1) of section 9. The said explanation reads as under:-

” Explanation 5.-For the removal of doubts, it is hereby clarified that an asset or a capital asset being any share or interest in a company or entity registered or incorporated outside India shall be deemed to be and shall always be deemed to have been situated in India, if the share or interest derives, directly or indirectly, its value substantially from the assets located in India”

3. A number of representations have been received by the Board stating that the purpose of introduction of Explanation 5 was to clarify the legislative intent regarding the taxation of income accruing or arising through transfer of a capital asset situate in India. Apprehensions have been expressed about the applicability of the Explanation to the transactions not resulting in any transfer, directly or indirectly of assets situated in India. It has been pointed out that such an extended application of the provisions of the Explanation may result in taxation of dividend income declared by a foreign company outside India. This may cause unintended double taxation and would be contrary to the generally accepted principles of source rule as well as the object and purpose of the amendment made by the Finance Act 2012.

4. The matter has been examined in the Board. The Explanatory Memorandum to the Finance Bill 2012 explains the purpose of the amendment to section 9 (1)(i) in the following words:-

“Section 9 of the Income-tax Act provides cases of income, which are deemed to accrue or arise in India. This is a legal fiction created to tax income, which may or may not arise in India and would not have been taxable but for the deeming provision created by this section, Sub-section (1)(i) provides a set of circumstances in which income accruing or arising, directly or indirectly, is taxable in India. One of the limbs of clause (i) is income accruing or arising directly or indirectly through the transfer of a capital asset situate in India. The legislative intent of this clause is to widen the application as it covers incomes, which are accruing or arising directly or indirectly. The section codifies source rule of taxation wherein the state where the actual economic nexus of income is situated has a right to tax the income irrespective of the place of residence of the entity deriving the income. Where corporate structure ls created to route funds, the actual gain or income arises only in consequence of the investment made in the activity to which such gains are attributable and not the mode through which such gains are realized. Internationally this principle is recognized by several countries, which provide that the source country has taxation right on the gains derived of offshore transactions where the value is attributable to the underlying assets……………….

…………Certain judicial pronouncements have created doubts about the scope and purpose of sections 9 and 195. Further, there are certain issues in respect of income deemed to accrue or arise where there are conflicting decisions of various judicial authorities.

Therefore, there is a need to provide clarificatory retrospective amendment to restate the legislative intent in respect of scope and applicability of section 9 and 195 and also to make other clarificatory amendments for providing certainty in law.”

5. The Explanatory Memorandum clearly provides that the amendment of section 9(1) (i) was to reiterate the legislative intent in respect of taxability of gains having economic nexus with India irrespective of the mode of realisation of such gains. Thus, the amendment sought to clarify the source rule of taxation in respect of income arising from indirect transfer of assets situated in India as explicitly mentioned in the Explanatory Memorandum. Viewed in this context, Explanation 5 would be applicable in relation to deeming any income arising outside India from any transaction in respect of any share or interest in a foreign company or entity, which has the effect of transferring, directly or indirectly, the underlying assets located in India, as income accruing or arising in India.

6. Declaration of dividend by such a foreign company outside India does not have the effect of transfer of any underlying assets located in India. It is therefore, clarified that the dividends declared and paid by a foreign company outside India in respect of shares which derive their value substantially from assets situated in India would not be deemed to be income accruing or arising in India by virtue of the provisions of Explanation 5 to section 9 (1) (i) of the Act.

7. This-his may be brought to the notice of all concerned for strict compliance.

8. Hindi version to follow.

(Anup Singh)

Under Secretary to the Government of India

(F. No. 500/17/2015-FT & TR-IV)

Copy to :

Chairperson and all Members of CBDT

All Pr. CCsIT/CCsIT/Pr.DsGIT/DsGIT

All Offrcers and Technical Sections of CBDT

ITCC Division of CBDT (3 copies)

O/o Pr. DGIT(Systems) for uploading on Departmental website

Database Cell for uploading on IRS Officers website

Guard File

(Anup Singh)

Under Secretary to the Government of India

Arun Jaitley: Expect GST Bill to pass in current session : 26-03-2015

Spelling out the Centre’s roadmap on further reforms, finance minister Arun Jaitley on Wednesday expressed hope that the Constitutional Amendment Bill for the introduction of the goods and services tax (GST) would be passed by Parliament in the second half of the Budget session and indicated that the government is willing to give up management control as part of strategic sales of state-owned firms.

“The next road map is the GST. I hope in the second part of the Budget session, the Constitutional Amendment Bill will be passed,” he said in his address at ‘The Growth Net’ conference. Following this, the empowered committee would draft the legislation for state governments, he said, expressing hope that the entire process should be completed by the end of the year.

The second part of the Budget session of Parliament is scheduled to start on April 20. Passage of the Bill in the upcoming session is essential as the government has targetted April 1, 2016, for the roll out of the GST.

Since the Centre will have to amend the Constitution for introduction of the tax, it will have to be passed by two-third majority in Parliament and then ratified by at least half the state legislatures. Following this, each state will also have to enact their separate GST legislation.

Meanwhile, Jaitley also announced that the finance ministry has worked out a prospective list of state-owned firms for strategic sales and indicated that the government is willing to give up management control in these sales.

Along with loss making units that the government can not revive, Jaitley announced that other public sector firms may also be taken up for strategic sales. According to the Budget 2015-16, disinvestment receipts have been pegged at Rs 41,000 crore and another Rs 28,500 crore is expected from strategic disinvestment.

The finance minister also expressed hope that some of the payments from the spectrum auction would come in this fiscal, helping the Centre meet its fiscal deficit target of 4.1 per cent of the GDP.

Jaitley also promised to step up spending on infrastructure to boost growth while defending the new series of national accounts that were prepared by the Central Statistics Office. “I have no reason to distrust the data from the CSO. They have expanded their methodology and follow a procedure done by all developed countries of the world,” he said, referring to the new series of GDP data that points to a much higher growth rate of the economy.

“Over the next ten years, we want higher rates of growth, and want to use this for poverty eradication … there is no room for complacency,” he stressed.

The finance minister said he reviewed the progress of highway projects this morning. “These are huge legacy issues. In the highways sector alone as many as 77 projects were stuck for want of one thing or the other,” he said, adding that “now by resolving the issues 24 of them have taken off”.

Source : PTI

88 dated 25-03-2015

RBI/2014-15/514

A.P. (DIR Series) Circular No. 88

March 25, 2015

To

All Authorised Persons, who are Indian Agents under Money Transfer Service Scheme.

Attention of Authorised Persons (APs), who are Indian Agents under Money Transfer Service Scheme (MTSS) is invited to the A.P. (DIR Series) Circular No. 10 dated July 21, 2014 on the captioned subject read with A.P. (DIR Series) Circular No. 68 dated January 28, 2015 on AML/CFT standards.

2. It has been decided that henceforth, Foreign Exchange Department shall not issue the instructions to the APs who are Indian Agents under Money Transfer Service Scheme, on the captioned subject separately and the instructions issued by Department of Banking Regulation, Central Office, Reserve Bank of India in this regard so far and from time to time in future, mutatis mutandis, be applicable to all APs.

3. These guidelines will also be applicable, mutatis mutandis, to all Sub-Agents of the Indian Agents under MTSS and it will be the sole responsibility of the APs (Indian Agents) to ensure that their Sub-agents adhere to these guidelines.

4. Authorised Persons (Indian Agents) may bring the contents of this circular to the notice of their Sub-Agents / constituents concerned.

5. The directions contained in this Circular have been issued under Section 10(4) and Section 11(1)of the Foreign Exchange Management Act, 1999 (42 of 1999) and also under the, Prevention of Money Laundering Act, (PMLA), 2002, as amended from time to time and are without prejudice to permission /approvals, if any, required under any other law.

2. It has been decided that henceforth, Foreign Exchange Department shall not issue the instructions to the Authorised Persons (APs) on the captioned subject separately and the instructions issued by Department of Banking Regulation, Central Office, Reserve Bank of India in this regard so far and from time to time in future, mutatis mutandis, shall be applicable to all APs.

3. These guidelines will also be applicable, mutatis mutandis, to all agents/ franchisees of Authorised Persons and it will be the sole responsibility of the franchisers to ensure that their agents / franchisees adhere to these guidelines.

4. Authorised Persons may bring the contents of this circular to the notice of their constituents concerned.

5. The directions contained in this Circular have been issued under Section 10(4) and Section 11(1)of the Foreign Exchange Management Act, 1999 (42 of 1999) and also under the, Prevention of Money Laundering Act, (PMLA), 2002, as amended from time to time and are without prejudice to permission /approvals, if any, required under any other law.

Narendra Modi led National Democratic Alliance (NDA)government, which had defended the constitutional validity of Section 66(A) of IT Act, on Tuesday said there can be no parallel between its stand and that of the previous UPA regime which tried to make it “an instrument to curb dissent, satire and anything else which did not suit it”.

Reacting to the Supreme Court judgement striking down Section 66(A) of the Information Technology Act, Communications and IT Minister Ravi Shankar Prasad said if the security establishment feels there is need to consider certain aspects in the light of the order, these shall be considered in a proper structured way with due safeguards so that the constitutional rights are not frustrated.

“There can be no parallel of our stand on this matter with that of the previous UPA regime. We have in writing confirmed that we stand for freedom of speech and expression, while the previous UPA government tried to make this law an instrument to curb dissent, satire and anything else which did not suit it,” he told reporters.

The Minister said the government welcomes SC decision and when the UPAgovernment came out with “draconian” provisions under 66(A), the BJP had opposed it and said that “66 is unacceptable in current form”.

Prasad said after detailed discussions, the government had filed an affidavit before the SC making its stand clear that it respects the freedom of speech and expression.

“Central Government encourages beneficial use of cyber space and the Act only seeks to regulate the use of cyber space which would fall within any of or allcategories stipulated under Article 19(2) of the Constitution of India,” the affidavit had said.

It added the penal provisions of the Act can never be interpreted so as to take within its sweep political debate, any form of honest dissent, decent humour, political satire etc.

The government said it had conveyed a request to the court that government is willing to come out with additional, more stringent guidelines so as to prevent abuse of Section 66A of the Act which allows arrest of a person for posting allegedly “offensive” content on websites.

Asked how the government would ensure regulation in the light of the SC judgement, Prasad “if something is really offensive of national security needs surely there is a process and law”. The court has laid down guidelines under Sec 79, he added.

“I am a supporter of self-regulation by both–those who post and those who allow that platform to be posted,” the minister said.

Source : The Economic Times

Supreme Court scraps Section 66A of IT Act: 4 top facts : 25-03-2015

In a landmark verdict, the Supreme Court has struck down Section 66A of IT Act, a controversial provision in the cyber law, that allocated the power to arrest to authorities for posting allegedly “offensive” content onwebsites saying, it is “unconstitutional” and has a “chilling effect” on freedom of speech and expression.

Here are 4 top facts:

1. Section 66A of the InformationTechnology Act, 2000 is struck down in its entirety being violative of Article 19(1)(a) and not saved under Article 19(2).

2. Section 69A and the Information Technology (Procedure and Safeguards for Blocking for Access of Information by Public) Rules 2009 are constitutionally valid.

3. Section 79 is valid subject to Section 79(3)(b) being read down to mean that an intermediary upon receiving actual knowledge from a court order or on being notified by the appropriate government or its agency that unlawful acts relatable to Article 19(2) are going to be committed then fails to expeditiously remove or disable access to such material.

Similarly, the Information Technology “Intermediary Guidelines” Rules, 2011 are valid subject to Rule 3 sub-rule (4) being read down in the same manner as indicated in the judgment.

4. Section 118(d) of the Kerala Police Act is struck down being violative of Article 19(1)(a) and not saved by Article 19(2).

Source : PTI

Notification No.31/2015 dated 24-03-2015

[To be published in the Gazette of India, Extraordinary,

Part-II, Section 3, Sub-section (ii)]

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

NOTIFICATION NO. 31/2015

New Delhi, the 24th March, 2015

S.O. (E).-In exercise of the powers conferred by clause (46) of section 10 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies for the purposes of the said clause, “West Bengal Transport Workers’ Social Security Scheme” of West Bengal State Social Security Board established by Government of West Bengal, in respect of the following specified income arising to that Board, namely:-

(c) amount received as registration fees and renewal fees paid by the registered beneficiaries;

and

(d) interest earned on fixed deposits.

2. This notification shall be applicable for the financial years 2014-15 to 2018-19.

3. The notification shall be effective subject to the conditions that the “West Bengal Transport Workers’ Social Security Scheme” of West Bengal State Social Security Board -

(a) does not engage in any commercial activity;

(b) its activities and the nature of the specified income remain unchanged throughout the financial years; and

(c) it files return of income in accordance with the provision of clause (c) of sub-section (4C) of section 139 of the said Act.

[F.No.196/21/2014-ITA.I]

DEEPSHIKHA SHARMA

Director to the Government of India

F. No. 380/1/2015-IT(B) dated 24-03-2015

F. No. 380/1/2015-IT(B)

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

DEPARTMENT OF REVENUE

CENTRAL BOARD OF DIRECT TAXES

North Block, New Delhi

24th March, 2015

To

All Pr. CCIT/CCIT (CCA)

Subject : Central Action Plan for the First Quarter i.e. (April, 2015 to June, 2015) of the FY 2015-16-regarding.

Madam/Sir

I am directed to forward herewith the Central Action Plan for the First Quarter i.e. (April 2015 to June, 2015) of the FY 2015-16. You are requested to circulate the same amongst all the officers in your region for necessary action.

Yours faithfully,

(Sandeep Singh)

Under Secretary to the Govt. of India

Encl: As above

Copy to: The Database Cell for uploading on the web-site www.irsofficeronline.gov.in

Monitoring of each task specified above and reporting of workload and performance

Monthly Dos

(b)

Submission of APARs for years upto 2014-2015 in respect of all categories of employees, duly completed by the Reporting and Reviewing Officers [Addl. CsIT(HQ)(Admn) to ensure compliance]

30th June

(c)

Disposal of all compounding applications pending as on April 1, 2015

(d)

Reporting gist of 50 quality assessments completed during the F.Y. 2014-2015 as per Central Action Plan, for each CCIT to Member (IT) with copy to Zonal Member – this

will be source material for publication in ‘Let-us-Share’

30th April

Notification No.29/2015 dated 24-03-2015

[To be published in the Gazette of India, Extraordinary,

Part-II, Section 3, Sub-section (ii)]

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

NOTIFICATION NO. 29/2015

New Delhi, the 24th March, 2015

S.O. (E).- In exercise of the powers conferred by clause (46) of section 10 of the Income-tax Act 1961 (43 of 1961), the Central Government hereby notifies for the purposes of the said clause, the Maharashtra State AIDS Control Society a body constituted by the Government of Maharashtra in respect of the following specified income arising to that Society, namely:-

“Amount received in the form of grants-in-aid from the Central Government”.

2. This notification shall be deemed to have been applied for the financial years 2011-2012, 2012-2013 and 2013-2014 and shall be applicable for the financial Years 2014-2015 and 2015-2016.

3. This notification shall be effective subject to the following conditions, namely:-

(a) the Maharashtra State AIDS Control Society does not engage in any commercial activity;

(b) the activities and the nature of the specified income of the Maharashtra State AIDS Control Society remain unchanged throughout the financial years; and

(c) the Maharashtra State AIDS Control Society files return of income in accordance with the provisions of clause (g) of sub-section (4C) of section 139 of the Income tax Act, 1961.

4. The grants received by the said Society shall be received and applied in accordance with the prevailing rules and regulations.

[F.No.196/74/2012-ITA.I]

(Deepshikha Sharma)

Director to the Government of Indi

Notification No.28/2015 dated 24-03-2015

[To be published in the Gazette of India, Extraordinary,

Part-II, Section 3, Sub-section (ii)]

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

NOTIFICATION NO. 28/2015

New Delhi, the 24th March, 2015

S.O. (E).- In exercise of the powers conferred by clause (46) of section, 10 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies for the purposes of the said clause, “Bihar Electricity Regulatory Commission”, a Commission constituted by the Government of Bihar in respect of the following specified income arising to that Commission, namely:-

(a) amount received in the form of Government grants;

(b) amount received as licence fee from licensees in electricity

(c) amount received as application processing fee; and

(d) interest earned on Government grants and fee received

2. This notification shall be applicable for the financial years 2011-12 to 2015-16.

3. The notification shall be effective subject to the conditions that the Bihar Electricity Regulatory Commission-

(a) does not engage in any commercial activity;

(b) its activities and the nature of the specified income remain unchanged throughout the financial years; and

(c) it files return of income in accordance with the provision n of clause (e) of sub-section (4C) of section 139 of the said Act.

[F.No.196/41/2013-ITA.I]

DEEPSHIKHA SHARMA

Director to the Government of India

Notification No.27/2015 dated 24-03-2015

[To be published in the Gazette of India, Extraordinary,

Part-II, Section 3, Sub-section (ii)]

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

NOTIFICATION NO. 27/2015

New Delhi, the 24th March, 2015

S.O. (E,).- In exercise of the powers conferred by clause (46) of section 10 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies for the purposes of the said clause, the “Joint Electricity Regulatory Commission for the State of Goa and Union territories”. a Commission constituted by the Government of India, in respect of the following specified income arising to that Commission, namely:-

(a) petition fees;

(b) licence fees;

(c) interest earned from deposits in banks.

2. This notification shall be applicable for the financial years 2011-12 to 2015-16.

3. The notification shall be effective subject to the conditions that the Joint Electricity Regulatory Commission for the State of Goa and Union territories-

(a) does not engage in any commercial activity;

(b) its activities and the nature of the specified income remain unchanged throughout the financial years; and

(c) it files return of income in accordance with the provision of clause (g) of sub-section (4C) of section 139 of the said Act.

[F.No.196/41/2012-ITA.I]

DEEPSHIKHA SHARMA

Director to the Government of India

Notification No.26/2015 dated 24-03-2015

[To be published in the Gazette of India, Extraordinary,

Part-II, Section 3, Sub-section (ii)]

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

NOTIFICATION NO. 26/2015

New Delhi, the 24th March, 2015

S.O._(E).- In exercise of the powers conferred by clause (46) of section 10 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies for the purposes of the said clause, “Kerala Toddy Workers’ Welfare Fund Board”, a Board established under the Kerala Toddy Workers’ Welfare Fund Act, 1969 (Kerala Act No. 22 of 1969), in respect of the following specified income arising to that Board, namely:-

S.O.….(E) - In exercise of the powers conferred by section 454 of the Companies Act, 2013 (18 of 2013) read with the Companies (Adjudication of Penalties) Rules, 2014, the Central Government hereby appoints following Registrars of Companies as adjudicating officers for the purposes of this Act in respect of jurisdictions indicated against each Registrar.

2. The Appeals, if any, filed before the concerned Regional Director having jurisdiction over the adjudicating offices shall be disposed of in accordance with the notification of the Government of India in the Ministry of Corporate Affairs published in the Gazette of India, Extraordinary, Part 11, section 3 sub-section (i), vide number G.S.R. 887 (E), dated the 14th December, 2011 and G.S.R. 763 (E), dated the 15th October, 2012.

3. This notification shall come into force with immediate effect.

[F. No. A-42011/112/2014-Ad.ll]

(AMARDEEP SINGH BHATIA)

Joint Secretary to the Government of India

Five smart things to know about tax deduction on House Rent Allowance (HRA) : 23-03-2015

1) A tax exemption on house rent allowance (HRA) received is available under Section 10 (13A) of the Income Tax Act to individuals.

2) It is a deduction available to a salaried person who has an HRA component as part of his salary package and is staying in a rented accommodation.

3) The exemption for HRA deduction is the minimum of i) Actual HRA received, ii) 50% of salary if living in metro else 40% and iii) Excess of rent paid over 10% of salary.

4) HRA exemptions are only available on submission of rent receipts or the rent agreement with the house owner by the tenant.

5) The rented premises must not be owned by the person claiming the tax exemption. If you stay with your parents and pay rent to them then you can claim that for tax deductions.

The content is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.

Source : The Economic Times

Notification No.25/2015 dated 23-03-2015

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY,

PART II, SECTION 3, SUB-SECTION (ii)]

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

NOTIFICATION NO. 25/2015

New Delhi, the 23rd March, 2015

Whereas a Agreement between the Government of the Republic of India and the Government of the Czechoslovak Socialist Republic was signed on the 27th January, 1986 for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and the same was published in the Gazette of India, Extraordinary, part II, -Section 3, Sub-section (i), vide number G.S.R.526 (E), dated the 25th of May, 1987;

And whereas the Slovak Republic is one of the independent States that have succeeded the Czechoslovak Socialist Republic;

And whereas under the applicable international laws regarding application of treaties in case of succession of States, this Agreement continues to be applicable in respect of the Slovak Republic, being one of the independent States to have succeeded the Czechoslovak Socialist Republic;

Now, therefore, in exercise of the powers conferred by section 119 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby clarifies that for the purposes of section 90 of the said Act, the Agreement signed between the Government of the Republic of India and the Government of the Czechoslovak Socialist Republic on the 27th January 1986 for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income continues to be applicable to the residents of the Slovak Republic.

[F.NO.501/12/1995-FTD-I

86 dated 23-03-2015

RBI/2014-15/509

A.P. (DIR Series) Circular No. 86

March 23, 2015

To

All Category – I Authorised Dealer Banks

Madam / Sir,

Exim Bank’s Line of Credit of USD 198.96 million to the Myanma Foreign Trade Bank (MFTB), Myanmar

Export-Import Bank of India (Exim Bank) has entered into an Agreement dated December 11, 2013 with the Myanma Foreign Trade Bank (MFTB), Republic of Union of Myanmar, for making available to the latter, a Line of Credit (LOC) of USD 198.96 million (USD One Hundred and Ninety Eight Million and Nine Hundred and Sixty Thousand) for financing 18 irrigation projects (16 ongoing and 2 rehabilitation) in Republic of Union of Myanmar. The goods, machinery, equipment and services including consultancy services from India for exports under this Agreement are those which are eligible for export under the Foreign Trade Policy of the Government of India and whose purchase may be agreed to be financed by the Exim Bank under this Agreement. Out of the total credit by Exim Bank under this Agreement, the goods and services including consultancy services of the value of at least 50 per cent of the contract price shall be supplied by the seller from India and the remaining 50 percent goods and services may be procured by the seller for the purpose of eligible contract from outside India.

2. The Credit Agreement under the LOC is effective from February 26, 2015. Under the LOC, the last date for opening of letters of credit and disbursement will be 48 months from the scheduled completion date of contract in the case of project exports and 72 months (December 10, 2019) from the execution date of the Credit Agreement in the case of other supply contracts.

3. Shipments under the LOC will have to be declared on EDF/ SDF Forms as per instructions issued by the Reserve Bank from time to time.

4. No agency commission is payable under the above LOC. However, if required, the exporter may use his own resources or utilize balances in his Exchange Earners’ Foreign Currency Account for payment of commission in free foreign exchange. Authorised Dealer Category- l (AD Category-l) banks may allow such remittance after realization of full payment of contract value subject to compliance with the prevailing instructions for payment of agency commission.

5. AD Category-I banks may bring the contents of this circular to the notice of their exporter constituents and advise them to obtain full details of the Line of Credit from the Exim Bank’s office at Centre One, Floor 21, World Trade Centre Complex, Cuffe Parade, Mumbai 400 005 or log on towww.eximbankindia.in

6. The Directions contained in this circular have been issued under sections 10(4) and 11(1) of theForeign Exchange Management Act (FEMA), 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully,

(A. K. Pandey)

Chief General Manager

F.NO.10/22/2015-CLB dated 20-03-2015

ORDER

DATED 20-3-2015

In exercise of the powers conferred by sub-section 4(B) of section 10(E) of the Companies Act, 1956 (1 of 1956) read with Regulation 4 of the Company Law Board Regulations, 1991, the Board in partial modification of the order of even number dated 29.01.2015, makes the following amendments in the work distribution of the New Delhi Bench for the purpose of exercising and discharging the Board’s powers and functions in the manner specified below:-

(i) ”The expression Shri Dhan Raj, Member (Technical) mentioned at serial number 3 under the expression NEW DELHI BENCH in para (a) shall be deleted;”

(ii) “The expression Shri Dhan Raj, Member (Technical) mentioned at serial number 3 under the expression NEW DELHI BENCH in sub-para (2) of para (c) shall be deleted”

S.O. 812(E).-In exercise of the powers conferred under the Income Tax Act, 1961, the Finance Act, 1992 and the Finance (No. 2) Act, 2014, the Central Government hereby notifies the creation of two additional benches of the Authority for Advance Rulings (Income Tax) including one at National Capital Region (NCR) and one new bench at Mumbai, with effect from the date of publication of this notification in the Gazette of India (Extraordinary).

[F. No. Q. 20015/6/2014-SOAd.IC (AAR)]

UDAI SINGH KUMAWAT, Jt. Secy.

Notification No.F. No. 01/34/2013-CL-V- Part-I dated 19-03-2015

[To be published in the Gazette of India, Extraordinary,

Part II, Section 3, Sub-section (i)]

GOVERNMENT OF INDIA

MINISTRY OF CORPORATE AFFAIRS

NOTIFICATION

New Delhi, the 19th March, 2015

G.S.R. (E).- In exercise of the powers conferred by section 108 read with sub-sections (1) and (2) of section 469 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules further to amend the Companies (Management and Administration) Rules, 2014, namely:-

1. (1) These rules may be called the Companies (Management and Administration) Amendment Rules, 2015.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. In the Companies (Management and Administration) Rules, 2014, for rule 20, the following rule shall be substituted, namely:-

“20. Voting though electronic means.- (1) The provisions of this rule shall apply in respect of the general meetings for which notices are issued on or after the date of commencement of this rule.

(2) Every company other than a company referred to in Chapter XB or Chapter XC of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 having its equity shares listed on a recognised stock exchange or a company having not less than one thousand members, shall provide to its members facility to exercise their right to vote on resolutions proposed to be considered at general meetings by electronic means.

Explanation.- For the purposes of this rule, the expression-

(i) “agency” means the National Securities Depository Limited, the Central Depository Services (India) Limited or any other entity approved by the Ministry of Corporate Affairs subject to the condition that the National Securities Depository Limited, the Central Depository Services (India) Limited or such other entity has obtained a certificate from the Standardisation Testing and Quality Certification Directorate, Department of Information Technology, Ministry of Communications and Information Technology, Government of India including with regard to compliance with parameters specified under Explanation (vi);

(ii) “cut-off date” means a date not earlier than seven days before the date of general meeting for determining the eligibility to vote by electronic means or in the general meeting;

(iv) “electronic voting system” means a secured system based process of display of electronic ballots, recording of votes of the members and the number of votes polled in favour or against, in such a manner that the entire voting exercised by way of electronic means gets registered and counted in an electronic registry in a centralised server with adequate cyber security;

(v) “remote e-voting” means the facility of casting votes by a member using an electronic voting system from a place other than venue of a general meeting;

(vii) “voting by electronic means” includes “remote e-voting” and voting at the general meeting through an electronic voting system which may be the same as used for remote e-voting.

(3) A member may exercise his right to vote through voting by electronic means on resolutions referred to in sub-rule (2) and the company shall pass such resolutions in accordance with the provisions of this rule.

(4) A company which provides the facility to its members to exercise voting by electronic means shall comply with the following procedure, namely:-

(i) the notice of the meeting shall be sent to all the members, directors and auditors of the company either

(a) by registered post or speed post ; or

(b) through electronic means, namely, registered e-mail ID of the recipient; or

(c) by courier service;

(ii) the notice shall also be placed on the website, if any, of the company and of the agency forthwith after it is sent to the members;

(iii) the notice of the meeting shall clearly state -

(A) that the company is providing facility for voting by electronic means and the business may be transacted through such voting;

(B) that the facility for voting, either through electronic voting system or ballot or polling paper shall also be made available at the meeting and members attending the meeting who have not already cast their vote by remote e-voting shall be able to exercise their right at the meeting;

(C) that the members who have cast their vote by remote e-voting prior to the meeting may also attend the meeting but shall not be entitled to cast their vote again;

(iv) the notice shall -

(A) indicate the process and manner for voting by electronic means ;

(B) indicate the time schedule including the time period during which the votes may be cast by remote e-voting;

(C) provide the details about the login ID;

(D) specify the process and manner for generating or receiving the password and for casting of vote in a secure manner.

(v) the company shall cause a public notice by way of an advertisement to be published, immediately on completion of despatch of notices for the meeting under clause (i) of sub-rule (4) but at least twenty-one days before the date of general meeting, at least once in a vernacular newspaper in the principal vernacular language of the district in which the registered office of the company is situated, and having a wide circulation in that district, and at least once in English language in an English newspaper having country-wide circulation, and specifying in the said advertisement, inter alia, the following matters, namely:-

(a) statement that the business may be transacted through voting by electronic means ;

(b) the date and time of commencement of remote e-voting;

(c) the date and time of end of remote e-voting;

(d) cut-off date;

(e) the manner in which persons who have acquired shares and become members of the company after the despatch of notice may obtain the login ID and password;

(f) the statement that -

(A) remote e-voting shall not he allowed beyond the said date and time;

(B) the manner in which the company shall provide for voting by members present at the meeting; and

(C) a member may participate in the general meeting even after exercising his right to vote through remote e-voting but shall not be allowed to vote again in the meeting; and

(D) a person whose name is recorded in the register of members or in the register of beneficial owners maintained by the depositories as on the cut-off date only shall be entitled to avail the facility of remote e-voting as well as voting in the general meeting;

(g) website address of the company, if any, and of the agency where notice of the meeting is displayed; and

(h) name, designation, address, email id and phone number of the person responsible to address the grievances connected with facility for voting by electronic means:

Provided that the public notice shall be placed on the website of the company, if any, and of the agency;

(vi) the facility for remote e-voting shall remain open for not less than three days and shall close at 5.00 p.m. on the date preceding the date of the general meeting;

(vii) during the period when facility for remote e-voting is provided, the members of the company, holding shares either in physical form or in dematerialised form, as on the cut-off date, may opt for remote e-voting:

Provided that once the vote on a resolution is cast by the member, he shall not be allowed to change it subsequently or cast the vote again:

Provided further that a member may participate in the general meeting even after exercising his right to vote through remote e-voting but shall not be allowed to vote again;

(viii) at the end of the remote e-voting period, the facility shall forthwith be blocked:

Provided that if a company opts to provide the same electronic voting system as used during remote e-voting during the general meeting, the said facility shall be in operation till all the resolutions are considered and voted upon in the meeting and may be used for voting only by the members attending the meeting and who have not exercised their right to vote through remote e-voting.

(ix) the Board of Directors shall appoint one or more scrutiniser, who may be Chartered Accountant in practice, Cost Accountant in practice, or Company Secretary in practice or an Advocate, or any other person who is not in employment of the company and is a person of repute who, in the opinion of the Board can scrutinise the voting and remote e-voting process in a fair and transparent manner:

Provided that the scrutiniser so appointed may take assistance of a person who is not in employment of the company and who is well-versed with the electronic voting system;

(x) the scrutiniser shall be willing to be appointed and he available for the purpose of ascertaining the requisite majority;

(xi) the Chairman shall, at the general meeting, at the end of discussion on the resolutions on which voting is to be held, allow voting, as provided in clauses (a) to (h) of sub-rule (1) of rule 21, as applicable, with the assistance of scrutiniser, by use of ballot or polling paper or by using an electronic voting system for all those members who are present at the general meeting but have not cast their votes by availing the remote e-voting facility.

(xii) the scrutiniser shall, immediately after the conclusion of voting at the general meeting, first count the votes cast at the meeting, thereafter unblock the votes cast through remote e-voting in the presence of at least two witnesses not in the employment of the company and make, not later than three days of conclusion of the meeting, a consolidated scrutiniser’s report of the total votes cast in favour or against, if any, to the Chairman or a person authorised by him in writing who shall countersign the same:

Provided that the Chairman or a person authorised by him in writing shall declare the result of the voting forthwith;

Explanation.- It is hereby clarified that the manner in which members have cast their votes, that is, affirming or negating the resolution, shall remain secret and not available to the Chairman, Scrutiniser or any other person till the votes are cast in the meeting.

(xiii) For the purpose of ensuring that members who have cast their votes through remote e-voting do not vote again at the general meeting, the scrutiniser shall have access, after the closure of period for remote e-voting and before the start of general meeting, to details relating to members, such as their names, folios, number of shares held and such other information that the scrutiniser may require, who have cast votes through remote e-voting but not the manner in which they have cast their votes:

(xiv) the scrutiniser shall maintain a register either manually or electronically to record the assent or dissent received, mentioning the particulars of name, address, folio number or client ID of the members, number of shares held by them, nominal value of such shares and whether the shares have differential voting rights;

(xv) the register and all other papers relating to voting by electronic means shall remain in the safe custody of the scrutiniser until the Chairman considers, approves and signs the minutes and thereafter, the scrutiniser shall hand over the register and other related papers to the company.

(xvi) the results declared along with the report of the scrutiniser shall be placed on the website of the company, if any, and on the website of the agency immediately after the result is declared by the Chairman :

Provided that in case of companies whose equity shares are listed on a recognised stock exchange, the company shall, simultaneously, forward the results to the concerned stock exchange or exchanges where its equity shares are listed and such stock exchange or exchanges shall place the results on its or their website.

(xvii) subject to receipt of requisite number of votes, the resolution shall be deemed to be passed on the date of the relevant general meeting.

Explanation.- For the purposes of this clause, the requisite number of votes shall be the votes required to pass the resolution as the ‘ordinary resolution’ or the `special resolution’, as the case may be, under section 114 of the Act.

(xviii) a resolution proposed to be considered through voting by electronic means shall not be withdrawn.”

[F. No. 01/34/2013-CL-V- Part-I]

AMARDEEP SINGH BHATIA

Joint Secretary to the Government of India

Note - The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 260(E), dated the 31st March, 2014 and subsequently amended vide number G.S.R. 415(E), dated the 23rd June, 2014 and vide number G.S.R. 537(E), dated the 24th July, 2014.

Hours ahead of US Federal Reserve’s monetary policy decision, RBI governor Raghuram Rajan met finance minister Arun Jaitley here on Wednesday and said that India is fully prepared to deal with situation arising out of the Fed’s moves on rates.

While the RBI governor did not rule out the possibility of near-term volatility in the markets, he said that in the medium term, markets will be back to normal.

“There will be some volatility in the market,” Rajan said to newspersons after emerging from the meeting with Jaitley, in comments quoted by newsagency NewsRise.

Adding that “normalcy will return soon,” Rajan said that the country has significant forex reserves and current account deficit is under control.

As on March 6, the country’s forex reserves stood at $312.32 billion while the total reserves stood at $337.79 billion, according to Reserve Bank of India (RBI) data.

Further, the current account deficit (CAD) is estimated to be 1.3 per cent of GDP in 2014-15, significantly lower than earlier projections on back of net capital inflows, mainly in the form of buoyant portfolio flows along with the support of FDI inflows and external commercial borrowings.

Market participants welcomed a reassurance coming from the RBI Governor. “Reassurance coming from the Governor is good. There is a consensus in themarket that ‘patient’ word will find no place in the FOMC (Federal Open MarketCommittee) statement. While the markets may see some correction, the marketis not too much concerned about the rate hike in US but on domestic earnings growth and the next phase of growth in market will follow the earnings growth,” said Nandkumar Surti, MD and CEO, JP Morgan AMC.

On Tuesday, in a speech at the RBI, Christine Lagarde, managing director,International Monetary Fund, had said that she feared the “taper tantrum” of 2013 was not a one-off event. She argued that the timing of interest-rate liftoff and the pace of subsequent rate increases “can still surprise markets”. Rajan has repeatedly warned about the impact central bank actions in major economies can have on the developing world.

2. As banks’ submission of NRD-CSR data in XBRL platform has stabilised, it has been decided to discontinue the submission of Stat 5 and Stat 8 Returns from March 2015. Accordingly banks, dealing in foreign exchange may stop sending Stat 5 and Stat 8 Returns (both hard and soft copies) to the Department of Statistics and Information Management, Reserve Bank of India.

3. The directions contained in this circular have been issued under Section 10(4) and 11(1) of theForeign Exchange Management Act (FEMA), 1999 (42 of 1999) and are without prejudice to permissions/approvals, if any, required under any other law.

(4) in rule 12, in sub-rule (1), in the Explanation, in clause (c), the words “or of an associate company” shall be omitted;

(5) in rule 13, in sub-rule (1), -

(a) in the proviso, for the words “provided that” the words “provided further that” shall be substituted and before the proviso as so amended, the following proviso shall be inserted, namely:-

“Provided that in case of any preferential offer made by a company to one or more existing members only, the provisions of sub-rule (1) and proviso to sub-rule (3) of rule 14 ofCompanies (Prospectus and Allotment of Securities) Rules, 2014 shall not apply.”

(6) in rule 18,-

(a) in sub-rule (1) -

(A) in clause (d), for sub-clauses (i) and (ii), the following sub-clauses shall be substituted , namely:-

Provided that in case of a non-banking financial company, the charge or mortgage under sub-clause (i) may be created on any movable property”

(B) in clause (d), after sub-clause (ii), following proviso shall be inserted, namely:-

“Provided further that in case of any issue of debentures by a Government company which is fully secured by the guarantee given by the Central Government or one or more State Government or by both, the requirement for creation of charge under this sub-rule shall not apply.”

Provided also that in case of any loan taken by a subsidiary company from any bank or financial institution the charge or mortgage under this sub-rule may also be created on the properties or assets of the holding company;

(b) in sub-rule (5), for the words “within sixty days of allotment of debentures”, the words “within three months of closure of the issue or offer” shall be substituted;

(c) after sub-rule (8), following sub–rules shall be inserted, namely:-

“(9) Nothing contained in this rule shall apply to any amount received by a company against issue of commercial paper or any other similar instrument issued in accordance with the guidelines or regulations or notification issued by the Reserve Bank of India.

(10) In case of any offer of foreign currency convertible bonds or foreign currency bonds issued in accordance with the Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 or regulations or directions issued by the Reserve Bank of India, the provisions of this rule shall not apply unless otherwise provided in such Scheme or regulations or directions.”

(7) in rule 19, in sub-rule (11), for the word, letters and figures “Form No. SH-14″, the word, letters and figures “Form SH-13″ shall be substituted.

(8) in the Annexure, for “Form SH-13″ and “Form SH-14″, the following Forms shall respectively, be substituted, namely:-

Converging tailwinds will lend the Indian economy a reasonably good consumption kicker

Indian private consumption will pick up in fiscal 2016, helped by falling fuel prices and inflation, according to Crisil Research. As a result, it expects household purchasing power to increase by Rs.1.40 lakh crore in the said period. This will, in turn, help sale of passenger vehicles and consumer appliances.

According to Crisil Research, savings on fuel expenses alone will be Rs.30,000 crore, and it will over thrice that amount at Rs.1.10 lakh crore for food.

This will lead to increase in spending power of Rs.1.40 lakh crore in fiscal 2016, when compared to Rs.50,900 crore in fiscal 2015, Crisil said. “These converging tailwinds, we believe, will lend the Indian economy a reasonably good consumption kicker.”

The firm expects these monies to more likely be spent on discreationary items than being put in formal savings. “…because the rise in real returns will be marginal given that nominal interest rates are on the decline.”

As per the old base year series, private consumption growth fell sharply in fiscal 2013 and 2014 to an average 4.9 per cent compared to 8.4 per cent in the preceding five years as consumer inflation hovered around 10 per cent and income growth turned slower.

This resulted in lower sales of passenger vehicles, which plunged to an average of 6.2 per cent in fiscal 2013 and 14, when compared to 29 per cent in fiscal 2011, it adds. According to Crisil, sales growth in air-conditioners, washing machines and refrigerators declined sharply to low single-digit of 3-4 per cent in fiscal 2014, when compared to 18-20 per cent in fiscal 2010.

Crisil expects the sectoral consumption story to turn around. It expects passenger vehicle sales to grow by 9-11 per cent in fiscal 2016, up from 3-5 per cent growth in fiscal 2015.

Similarly, it forecasts household appliances sales to be higher than last year – television sales at about 9 per cent compared to a 0.3 per cent decline in fiscal 2015, air-conditioners at 15 per cent compared to 9 per cent, and refrigerator at 10 per cent compared to 5 per cent.

“Other consumption boosters will be improving incomes and an increase in access to credit enabled by schemes such as Pradhan Mantri Jan Dhan Yojana,’’’ it adds.

Finance Minister Arun Jaitley accused Congress of doing “negative politics” and using “obstructionism” to oppose the land bill, even as he expressed hope that “every way will be found” for its passage.

Terming the protest march by Congress and other parties against the land acquisition bill as one, whose sole purpose is to stall development in the country, he said, they had no right to do so and this will push the “country backwards”.

“The sole purpose of Congress party’s march to Rashtrapati Bhawan is to stall development in the country. It is a continuation of Congress’ politics of obstructionism,” he said, adding “Congress is adopting obstructionism both as a strategy and now like an ideology”.

He termed it as “negative politics” that is intended to keep India backwards.

Asked about the fate of the land bill in the wake of opposition parties getting together against it, Arun Jaitley said, “every way will be found” for its passage.

The finance minister, also a senior Bharatiya Janata Party (BJP) leader, said the Ordinance provides discretion to state governments to continue under the old law or enforce any of the provisions of the new Section 10-A and questioned that the Congress and its friendly parties have no right to “stop” states from progressing.

“They have no right to stop those states which want to progress,” he said, wondering why any political party with any commitment to development must oppose this bill.

Jaitley said the Ordinance is totally in “favour of farmers” and agriculture sector and through it rural infrastructure will be created, industrial corridors will come up in rural areas and it provides for creation of affordable housing for the poor migrating from rural to urban areas.

“This section of society has the right to progress. It has hopes and aspirations to live a good life,” he said.

Source : The Financial Express

84 dated 17-03-2015

BI/2014-15/502

A.P. (DIR Series) Circular No. 84

March 17, 2015

To

All Category – I Authorised Dealer Banks

Madam / Sir,

Exim Bank’s Line of Credit of USD 5.0492 million to the Banco Exterior De Cuba

Export-Import Bank of India (Exim Bank) has entered into an Agreement dated September 2, 2014 with the Banco Exterior De Cuba, for making available to the latter, a Line of Credit (LOC) of USD 5.0492 million (USD Five Million and Forty Nine Thousand two hundred) for financing the modernization of injectable product plant in the Republic of Cuba. The goods, machinery, equipment and services including consultancy services from India for exports under this Agreement are those which are eligible for export under the Foreign Trade Policy of the Government of India and whose purchase may be agreed to be financed by the Exim Bank under this Agreement. Out of the total credit by Exim Bank under this Agreement, the goods and services including consultancy services of the value of at least 75 per cent of the contract price shall be supplied by the seller from India and the remaining 25 percent goods and services may be procured by the seller for the purpose of Eligible Contract from outside India.

2. The Credit Agreement under the LOC is effective from February 3, 2015 and the date of execution of Agreement is September 2, 2014. Under the LOC, the last date for opening of Letters of Credit and Disbursement will be 48 months from the scheduled completion date of contract in the case of Project exports and 72 months from the execution date of the Credit Agreement in the case of supply contracts.

3. Shipments under the LOC will have to be declared on EDF/ SDF Forms as per instructions issued by the Reserve Bank from time to time.

4. No agency commission is payable under the above LOC. However, if required, the exporter may use his own resources or utilize balances in his Exchange Earners’ Foreign Currency Account for payment of commission in free foreign exchange. Authorised Dealer Category- l (AD Category-l) banks may allow such remittance after realization of full payment of contract value subject to compliance with the prevailing instructions for payment of agency commission.

5. AD Category-I banks may bring the contents of this circular to the notice of their exporter constituents and advise them to obtain full details of the Line of Credit from the Exim Bank’s office at Centre One, Floor 21, World Trade Centre Complex, Cuffe Parade, Mumbai 400 005 or log on towww.eximbankindia.in

6. The Directions contained in this circular have been issued under sections 10(4) and 11(1) of theForeign Exchange Management Act (FEMA), 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully,

(A.K. Pandey)

Chief General Manager

Notification No.24/2015 dated 17-03-2015

TO BE PUBLISHIED IN THE GAZETTE OF INDIA, EXTRAORDINARY,

PART II, SECTION 3, SUB-SECTION (ii)]

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

NOTIFICATION NO. 24/2015

New Delhi, the 17th March, 2015

S.O. (E). – Whereas, an Agreement and Protocol (hereinafter referred to as the said Agreement and the Protocol) as set out in the Annexure to this notification, was entered into between the Government of the Republic of India and the Government of the Republic of Croatia for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income that was signed on the 12th February, 2014;

2. And whereas, the date of entry into force of the said Agreement and Protocol is the 6th February, 2015, being the date thirty days after the date of the latter of the notifications of completion of the procedures as required by the respective laws for entry into force of the said Agreement and Protocol, in accordance with paragraph 1 of article 29 of the said Agreement;

3. And whereas, clause (b) of paragraph 3 of article 29 of the said Agreement provides that the provisions of the said Agreement shall have effect in India in respect of income arising in any fiscal year beginning on or after the first day of April next following the calendar year in which the Agreement enters into force.

4. Now, therefore, in exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby directs that all the provisions of the said Agreement and Protocol between the Government of the Republic of India and the Government of the Republic of Croatia for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income, as set out in the Annexure hereto, shall be given effect to in the Union of India with effect from the first day of April, 2016, being the first day of the fiscal year next following the calendar year in which the said Agreement entered into force.

[F. No. 501/09/1995-FTD-I]

(Akhilesh Ranjan)

Joint Secretary

ANNEXURE

AGREEMENT

BETWEEN

THE GOVERNMENT OF THE REPUBLIC OF INDIA

AND

THE GOVERNMENT OF THE REPUBLIC OF CROATIA

FOR THE AVOIDANCE OF DOUBLE TAXATION AND FOR THE PREVENTION

OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME

The Government of the Republic of India and the Government of the Republic of Croatia,

Desiring to conclude an Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and with a view to promoting economic cooperation between the two countries,

Have agreed as follows:

Article I

PERSONAL SCOPE

This Agreement shall apply to persons who are residents of one or both of the Contracting States.

Article 2

TAXES COVERED

1. This Agreement shall apply to taxes on income imposed on behalf of a Contracting State or of its political subdivisions or local authorities, irrespective of the manner in which they are levied.

2. There shall be regarded as taxes on income all taxes imposed on total income, or on elements of income, including taxes on gains from the alienation of movable or immovable property, as well as taxes on the total amounts of wages or salaries paid by enterprises.

3. The existing taxes to which the Agreement shall apply are in particular:

(a) In India:

the income tax, including any surcharge thereon; (hereinafter referred to as “Indian tax”).

(b) In Croatia:

(i) the profit tax; and

(ii) the income-tax,

(hereinafter referred to as the “Croatian tax”);

4. The Agreement shall apply also to any identical or substantially similar taxes which are imposed after the date of signature of the Agreement in addition to, or in place of, the existing taxes referred to in paragraph 3. The competent authorities of the Contracting States shall notify each other of significant changes which have been made in their respective taxation laws.

Article 3

GENERAL DEFINITIONS

1. For the purposes of this Agreement, unless the context otherwise requires:

(a) the term “Republic of Croatia” means the territory of the Republic of Croatia as well as those maritime areas adjacent to the outer limit of territorial sea, including seabed and sub-soil thereof, over which the Republic of Croatia in accordance with international law (and the laws of the Republic of Croatia) exercises its sovereign rights and jurisdiction;

(b) the term “India” means the territory of India and includes the territorial sea and airspace above it, as well as any other maritime zone in which India has sovereign rights, other rights and jurisdiction, according to the Indian law and in accordance with international law, including the U.N. Convention on the Law of the Sea;

(c) the term “person” includes an individual, a company, a body of persons and any other entity which is treated as a taxable unit under the taxation laws in force in the respective Contracting States;

(d) the term “company” means any body corporate or any entity which is treated as a body corporate for tax purposes;

(e) the terms “enterprise of a Contracting State” and “enterprise of the other Contracting State” mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State;

(f) the term “international traffic” means any transport by a ship or aircraft operated by an enterprise which is a resident of a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State;

(g) the term “competent authority” means:

(i) in the case of Croatia, the Minister of Finance or his authorized representative;

(ii) in the case of India, the Central Government in the Ministry of Finance

(Department of Revenue) or its authorized representative;

(h) the term “national” means:

(i) any individual possessing the nationality of a Contracting State;

(ii) any legal person, partnership or association deriving its status as such from the laws in force in a Contracting State;

(i) the term “fiscal year” means:

(i) in the case of Croatia, the calendar year;

(ii) in the case of India, the financial year beginning on the 1st day of April;

(J) the term “tax” means Croatian tax or Indian tax, as the context requires, but shall not include any amount which is payable in respect of any default or omission in relation to the taxes to which this Agreement applies or which represents a penalty or fine imposed relating to those taxes;

(k) the terms “a Contracting State” and “the other Contracting State” mean the Republic of Croatia or the Republic of India as the context requires.

2. As regards the application of the Agreement by a Contracting State any term not defined therein shall, unless the context otherwise requires, have the meaning which it has under the law of that State concerning the taxes to which the Agreement applies.

Article 4

RESIDENT

1. For the purposes of this Agreement, the term “resident of a Contracting State” means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature. This term does not include any person who is liable to tax in that State in respect only of income from sources in that State.

2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows:

(a) he shall be deemed to be a resident of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident of the State with which his personal and economic relations are closer (centre of vital interests);

(b) if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident of the State in which he has an habitual abode;

(c) if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident of the State of which he is a national;

(d) if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.

3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident of the State in which its place of effective management is situated. If the State in which its place of effective management is situated cannot be determined, then the competent authorities of the Contracting States shall settle the question by mutual agreement.

Article 5

PERMANENT ESTABLISHMENT

1. For the purposes of this Agreement, the term “permanent establishment” means a fixed place of business through which the business of an enterprise is wholly or partly carried on.

2. The term “permanent establishment” includes especially:

(a) a place of management;

(b) a branch;

(c) an office;

(d) a factory;

(e) a workshop;

(f) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources;

(g) a sales outlet;

(h) a warehouse in relation to a person providing storage facilities for others; and

(i) a farm, plantation or other place where agricultural, forestry, plantation or related activities are carried on.

3. A building site or construction or assembly project or supervisory activities in connection therewith constitute a permanent establishment only if such site, project or activity last more than 12 months.

4. An enterprise shall be deemed to have a permanent establishment in a Contracting State and to carry on business through that permanent establishment if it provides services or facilities in connection with, or supplies plant and machinery on hire used for or to be used in the prospecting for, or extraction or exploitation of mineral oils in that State.

5. Notwithstanding the preceding provisions of this Article, the term “permanent establishment” shall be deemed not to include:

(a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;

(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;

(c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;

(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise;

(e) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character;

(f) the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs (a) to (e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.

6. Notwithstanding the provisions of paragraphs 1 and 2, where a person – other than an agent of an independent status to whom paragraph 8 applies – is acting in a Contracting State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first-mentioned Contracting State in respect of any activities which that person undertakes for the enterprise, if such a person:

(a) has and habitually exercises in that State an authority to conclude contracts in the name of the enterprise, unless the activities of such person are limited to those mentioned in paragraph 4 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph; or

(b) has no such authority, but habitually maintains in the first-mentioned State a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise; or

(c) habitually secures orders in the first-mentioned State, wholly or almost wholly for the enterprise itself or for the enterprise and other enterprises controlling, controlled by, or subject to the same control, as that enterprise.

7. Notwithstanding the preceding provisions of this Article, an insurance enterprise of a Contracting State shall, except in regard to re-insurance, be deemed to have a permanent establishment in the other Contracting State if it collects premiums in the territory of that other State or insures risks situated therein through a person other than an agent of an independent status to whom paragraph 8 applies.

8. An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise, he will not be considered an agent of an independent status within the meaning of this paragraph.

9. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.

Article 6

INCOME FROM IMMOVABLE PROPERTY

1. Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State.

2. The term “immovable property” shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources; ships, boats, aircraft and motor cars shall not be regarded as immovable property. -

3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property.

4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services.

Article 7

BUSINESS PROFITS

1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may also be taxed in the other State but only so much of them as is attributable to that permanent establishment.

2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.

3. In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere, in accordance with the provisions of and subject to the limitations of the tax laws of that State.

4. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.

5. For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.

6. Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article.

Article 8

INTERNATIONAL TRAFFIC

1. Income derived by an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that Contracting State.

2. Income derived by a transportation enterprise which is a resident of a Contracting State from the use, maintenance, or rental of containers (including trailers and other equipment for the transport of containers) used for transport of goods or merchandise in international traffic shall be taxable only in that Contracting State unless the containers are used solely within the other Contracting State.

3. If the place of effective management of a shipping enterprise is aboard a ship, then it shall be deemed to be situated in the Contracting State in which the home harbour of the ship is situated or if there is no such home harbour, in the Contracting State of which the operator of the ship is a resident.

4. For the purposes of this Article interest on funds connected with the operation of ships or aircraft’ in international traffic shall be regarded as income derived from the operation of such ships or aircraft and the provisions of Article 11 shall not apply in relation to such interest.

5. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operation agency.

Article 9

ASSOCIATED ENTERPRISES

1. Where

(a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or

(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State,

and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.

2. Where a Contracting State includes in the profits of an enterprise of that State and taxes accordingly – profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Agreement and the competent authorities of the Contracting States shall, if necessary consult each other.

Article 10

DIVIDENDS

1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.

2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the recipient is the beneficial owner of the dividends the tax so charged shall not exceed:

(a) 5 percent of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) which holds directly at least 10 per cent of the capital of the company paying the dividends;

(b) 15 per cent of the gross amount of the dividends in all other cases.

The competent- authorities of the Contracting States shall by mutual agreement settle the mode of application of these limitations.

This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.

3. The term “dividends” as used in this Article means income from shares or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident.

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply. -

5. Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the company’s undistributed profits to a tax on the company’s undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.

Article 11

INTEREST

1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2. However, such interest may also. be taxed in the Contracting State in which it arises and according to the laws of that State, but if the recipient is the beneficial owner of the interest the tax so charged shall not exceed 10 per cent of the gross amount of the interest. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation.

3. Notwithstanding the provisions of paragraph 2 interest arising in a Contracting State shall be exempt from tax in that State provided it is derived and beneficially owned by:

(i) the Government, a political subdivision or a local authority of the other Contracting State; or

(ii) the Central Bank of the other Contracting State or any other bank or governmental financial institutions/agencies that may be mutually agreed upon between the two Contracting States.

4. The term “interest” as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor’s profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article.

5. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.

6. Interest shall be deemed to arise in a Contracting State when the payer is that State itself, a political subdivision, a local authority or a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base is situated.

7. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.

Article 12

ROYALTIES AND FEES FOR TECHNICAL SERVICES

1. Royalties or fees for technical services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2. However, such royalties or fees for technical services may also be taxed in the Contracting State in which they arise, and according to the laws of that State, but if the recipient is the beneficial owner of the royalties or fees for technical services, the tax so charged shall not exceed 10 per cent of the gross amount of the royalties or fees for technical services.

3. (a) The term “royalties” as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films, films or tapes or other means of reproduction for radio or television broadcasting, satellite or cable transmission for broadcasting to the general public through any form of electronic media, any patent, trade mark, design or model, plan, secret formula or process, or any industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience (know-how).

(b) The term “fees for technical services” means payment of any kind in consideration for the rendering of any managerial, technical or consultancy services including the provision of services by technical or other personnel but does not include payments for services mentioned in Articles 14 and 15 of this Agreement.

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties or fees for technical services being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties or fees for technical services arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties or fees for technical services are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.

5. Royalties or fees for technical services shall be deemed to arise in a Contracting State when the payer is that State itself, a political subdivision, a local authority or a resident of that State. Where, however, the person paying the royalties or fees for technical services, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the liability to pay the royalties or fees for technical services was incurred, and such royalties or fees for technical services are borne by such permanent establishment or fixed base, then such royalties or fees for technical services shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.

6. Where, by-reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties or fees for technical services, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.

Article 13

CAPITAL GAINS

1. Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other State.

2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise) or of such fixed base, may also be taxed in that other State.

3. Gains derived by an enterprise of a Contracting State from the alienation of ships or aircraft operated in international traffic or movable property pertaining to the operation of such ships or aircraft shall be taxable only in that State.

4. Gains from the alienation of shares of the capital stock of a company the property of which consists directly or indirectly principally of immovable property situated in a Contracting State may be taxed in that State.

5. Gains from the alienation of shares, other than those mentioned in paragraph 4, in a company which is a resident of a Contracting State may be taxed in that Contracting State.

6. Gains from the alienation of any property other than that referred to in paragraphs 1 to 5, shall be taxable only in the Contracting State of which the alienator is a resident.

Article 14

INDEPENDENT PERSONAL SERVICES

1. Income derived by a resident of a Contracting State in respect of professional services or other activities of an independent character shall be taxable only in that State except in the following circumstances, when such income may also be taxed in the other ‘Contracting State:

(a) if he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities; in that case, only so much of the income as is attributable to that fixed base may be taxed in that other State; or

(b) if his stay in the other State is for a period or periods aggregating 183 days or more in any 12-month period commencing or ending in the fiscal year concerned; in that case, only so much of the income as is derived from his activities performed in that other State may be taxed in that other State.

2. The term “professional services” includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, surgeons, dentists and accountants.

Article 15

DEPENDENT PERSONAL SERVICES

1. Subject to the provisions of Articles 16, 18 and 19, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.

2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if:

(a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any 12-month period commencing or ending in the fiscal year concerned, and

(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State, and

(c) the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State.

3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic, by an enterprise of a Contracting State may be taxed in that State.

Article 16

DIRECTORS’ FEES

Directors’ fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors of a company which is a resident of the other Contracting State may also be taxed in that other State.

Article 17

ARTISTES AND SPORTSPERSONS

1. Notwithstanding the provisions of Articles 14 and 15, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsperson, from his personal activities as such exercised in the other Contracting State, may be taxed in that other State.

2. Where income in respect of personal activities exercised by an entertainer or a sportsperson in his capacity as such accrues not to the entertainer or sportsperson himself but to another person, that income may, notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the Contracting State in which the activities of the entertainer or sportsperson are exercised.

3. The provisions of paragraphs 1 and 2, shall not apply to income from activities performed in a Contracting State by entertainers or sportspersons if the visit to that State is substantially supported by public funds of one or both of the Contracting States or of political subdivisions or local authorities thereof. In such a case, the income is taxable only in the Contracting State of which the entertainer or sportsperson is a resident.

Article 18

PENSIONS

Subject to the provisions of paragraph 2 of Article 19, pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State.

Article 19

GOVERNMENT SERVICE

1. (a) Remuneration, other than a pension, paid by a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.

(b) However, such remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the individual is a resident of that State who.,

(i) is a national of that State; or

(ii) did not become a resident of that State solely for the purpose of rendering the services.

2. (a) Any pension paid by, or out of funds created by, a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.

(b) However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State.

3. The provisions of Articles 15, 16 and 18 shall apply to remuneration and pensions in respect of services rendered in connection with a business carried on by a Contracting State or a political subdivision or a local authority thereof.

Article 20

STUDENTS AND APPRENTICES

1. A student or business apprentice who is or was a resident of a Contracting State immediately before visiting the other Contracting State and who is present in that other Contracting State solely for the purpose of his education or training shall be exempt from tax in that other State on:

(a) payments made to him by persons residing outside that other State for the purposes of his maintenance, education or training; and

(b) remuneration from employment in that other State, in an amount not exceeding US$ 1000 or its equivalent amount during any fiscal year,

as the case may be, provided that such employment is directly related to his studies or is undertaken for the purpose of his maintenance.

2. The benefit of this Article shall extend only for such period of time as may be reasonable or customarily required to complete the education or training undertaken, but in no event shall any individual have the benefits of this Article for more than five consecutive years from the date of his first arrival in that other Contracting State.

Article 21

PROFESSORS, TEACHERS AND RESEARCH SCHOLARS

1. A professor or teacher who is or was a resident of the Contracting State immediately before visiting the other Contracting State for the purpose of teaching or engaging in research, or both, at a university, college, school or other approved institution in that other Contracting State shall be exempt from tax in that other State on any remuneration for such teaching or research for a period not exceeding two years from the date of his arrival in that other State.

2. This Article shall not apply to income from research, if such research is undertaken primarily for the private benefit of a specific person or persons.

3. For the purposes of this Article and Article 20, an individual shall be deemed to be a resident of a Contracting State if he is resident in that State in the fiscal year in which he visits the other Contracting State or in the immediately preceding fiscal year.

4. For the purposes of paragraph 1 “approved institution” means an institution which has been approved in this regard by the competent authority of the concerned State.

Article 22

OTHER INCOME

1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxable only in that State.

2. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.

3. Notwithstanding the provisions of paragraph 1, if a resident of a Contracting State derives income from sources within the other Contracting State in the form of lotteries, crossword puzzles, races including horse races, card games and other games of any sort or gambling or betting of any form or nature whatsoever, such income may be taxed in the other Contracting State.

Article 23

ELIMINATION OF DOUBLE TAXATION

1. The laws in force in either of the Contracting State will continue to govern the taxation of income in the respective Contracting States except where provisions to the contrary are made in this Agreement.

2. In the case of Croatia double taxation shall be eliminated as follows:

Where a resident of Republic of Croatia derives income which, in accordance with the provisions of this Agreement, may be taxed in India, Republic of Croatia shall allow as a deduction from the tax on the income of that resident an amount equal to the income tax paid in India. Such deduction shall not, however, exceed that part of the income tax as computed before the deduction is given, which is attributable to the income which may be taxed in India.

3. In the case of India double taxation shall be eliminated as follows:

Where a resident of India derives income which, in accordance with the provisions of this Agreement, may be taxed in the Republic of Croatia, India shall allow as a deduction from the tax on the income of that resident an amount equal to the income tax paid in Croatia whether directly or by deduction at source. Such amount shall not however exceed that part of the income tax, as computed before the deduction is given, which is attributable to the income which may be taxed in Croatia.

4. Income which in accordance with the provisions of this Agreement, is not to be subjected to tax in a Contracting State, may be taken into account for calculating the rate of tax to be imposed in that Contracting State.

Article 24

NON-DISCRIMINATION

1. Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the Contracting States.

2. The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. This provision shall not be construed as preventing a Contracting State from charging the profits of a permanent establishment which a company of the other Contracting State has in the first-mentioned State at a rate of tax which is higher than that imposed on the profits of a similar company of the first-mentioned Contracting State, nor as being in conflict with the provisions of paragraph 3 of Article 7 of this Agreement.

This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.

3. Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the first-mentioned State are or may be subjected.

4. Except where the provisions of paragraph 1 of Article 9, paragraph 7 of Article 11, or paragraph 6 of Article 12, apply, interest, royalties and other disbursement paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the .purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State.

5. The provisions of this Article shall, notwithstanding the provisions of Article 2, apply to taxes of every kind and description.

Article 25

MUTUAL AGREEMENT PROCEDURE

1. Where a person considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Agreement, he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of the Contracting State of which he is a resident or, if his case comes under paragraph 1 of Article 24, to that of the Contracting State of which he is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of the Agreement.

2. The competent authority shall endeavour, if the objection appears to it to be justified and if ,it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with the Agreement. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States.

3. The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Agreement. They may also consult together for the elimination of double taxation in cases not provided for in the Agreement.

4. The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs. When it seems advisable in order to reach agreement to have an oral exchange of opinions, such exchange may take place through a Commission consisting of representatives of the competent authorities of the Contracting States.

Article 26

EXCHANGE OF INFORMATION

1. The competent authorities of the Contracting States shall exchange such information (including documents), as is necessary for carrying out the provisions of this Agreement or of the domestic laws of the Contracting States concerning taxes covered by the Agreement insofar as the taxation thereunder is not contrary to the Agreement in particular-for the prevention of fraud or evasion of such taxes. The exchange of information is not restricted by Article 1. Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) involved in the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes covered by the Agreement. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. Notwithstanding the foregoing, information received by a Contracting State may be used for other purposes when such information may be used for such other purposes under the laws of both Contracting States and the competent authority of the supplying State authorises such use.

2. In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation:

(a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;

(b) to supply information or documents which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;

(c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy.

3. If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 2 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information.

4. In no case shall the provisions of paragraph 2 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person.

Article 27

ASSISTANCE IN THE COLLECTION OF TAXES

The Contracting States shall lend assistance to each other in the collection of revenue claims. This assistance is not restricted by Articles 1 and 2. The competent authorities of the Contracting States may by mutual agreement settle the mode of application of this Article.

2. The term “revenue claim” as used in this Article means an amount owed in respect of taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to this Agreement or any other instrument to which the Contracting States are parties, as well as interest, administrative penalties and costs of collection or conservancy related to such amount.

3. When a revenue claim of a Contracting State is enforceable under the laws of that State and is owed by a person who, at that time, cannot, under the laws of that State, prevent its collection, that revenue claim shall, at the request of the competent authority of that State, be accepted for purposes of collection by the competent authority of the other Contracting State. That revenue claim shall be collected by that other State in accordance with the provisions of its laws applicable to the enforcement and collection of its own taxes as if the ,revenue claim were a revenue claim of that other State.

4. When a revenue claim of a Contracting State is a claim in respect of which that State may, under its law, take measures of conservancy with a view to ensure its collection, that revenue claim shall, at the request of the competent authority of that State, be accepted for purposes of taking measures of conservancy by the competent authority of the other Contracting State. That other State shall take measures of conservancy in respect of that revenue claim in accordance with the provisions of its laws as if the revenue claim were a revenue claim of that other State even if, at the time when such measures are applied, the revenue claim is not enforceable in the first-mentioned State or is owed by a person who has a right to prevent its collection.

5. Notwithstanding the provisions of paragraphs 3 and 4, a revenue claim accepted by a Contracting State for purposes of paragraphs 3 or 4 shall not, in that State, be subject to the time limits or accorded any priority applicable to a revenue claim under the laws of that State by reason of its nature as such. In addition, a revenue claim accepted by a Contracting State for the purposes of paragraphs 3 or 4 shall not, in that State, have any priority applicable to that revenue claim under the laws of the other Contracting State.

6. -Proceedings with respect to the existence, validity or the amount of a revenue claim of a Contracting State shall only be brought before the courts or administrative bodies of that State. Nothing in this Article shall be construed as creating or providing any right to such proceedings before any court or administrative body of the other Contracting State.

7. Where, at any time after a request has been made by a Contracting State under paragraphs 3 or 4 and before the other Contracting State has collected and remitted therelevant revenue claim to the first-mentioned State, the relevant revenue claim ceases to be:

(a) in the case of a request under paragraph 3, a revenue claim of the first-mentioned State that is enforceable under the laws of that State and is owed by a person who, at that time, cannot, under the laws of that State, prevent its collection, or

(b) in the case of a request under paragraph 4, a revenue claim of the first-mentioned State in respect of which that State may, under its laws, take measures of conservancy with a view to ensure its collection.

The competent authority of the first-mentioned State shall promptly notify the competent authority of the other State of that fact and, at the option of the other State, the firstmentioned State shall either suspend or withdraw its request.

8. In no case shall the provisions of this Article be construed so as. to impose on a Contracting State the obligation:

(a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;

(b) to carry out measures which would be contrary to public policy (ordre public);

(c) to provide assistance if the other Contracting State has not pursued all reasonable measures of collection or conservancy, as the case may be, available under its laws or administrative practice;

(d) to provide assistance in those cases where the administrative burden for that State is clearly disproportionate to the benefit to be derived by the other Contracting State.

Article 28

MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS

Nothing in this Agreement shall affect the fiscal privileges of members of diplomatic missions or consular posts under the general rules of international law or under the provisions of special agreements.

Article 29

ENTRY INTO FORCE

1. The Contracting States shall notify each other in writing, through diplomatic channels, of the completion of the procedure required by the respective laws for the entry into force of this Agreement.

2. This Agreement shall enter into force thirty days after the date of receipt of the later of the notifications referred to in paragraph 1 of this Article.

3. The provisions of this Agreement shall have effect:

(a) in Croatia: in respect of income or profits arising in any fiscal year beginning on or after the first day of January next following the calendar year in which the Agreement enters into force; and

(b) in India: in respect of income arising in any fiscal year beginning on or after the first day of April next following the calendar year in which the Agreement enters into force.

Article 30

TERMINATION

This Agreement shall remain in force indefinitely until terminated by a Contracting State. Either Contracting State may terminate the Agreement, through diplomatic channels, by giving notice of termination in writing at least six months before the end of any calendar year beginning after the expiration of five years from the date of entry into force of the Agreement. In such event, the Agreement shall cease to have effect:

(a) in Croatia: in respect of income or profits arising in any fiscal year beginning on or after the first day of January next following the calendar year in which the notice of termination is given;

(b) in India: in respect of income arising in any previous year beginning on or after the 1st April next following the calendar year in which the notice of termination is given.

IN WITNESS WHEREOF the undersigned, being duly authorised thereto, have signed this Agreement.

DONE in two originals at Zagreb this 12th day of February, 2014 in the Hindi, English and Croatian languages, all three texts being equally authentic. In case of divergence between the texts the English text shall prevail.

FOR THE GOVERNMENT OF THE REPUBLIC OF INDIA

FOR THE GOVERNMENT OF THE REPUBLIC OF CROATIA

(Smt. Preneet Kaur)

(Mr. Slavko Linic)

Minister of State for External Affairs

Minister of Finance

PROTOCOL

At the signing of the Agreement between the Government of the Republic of Croatia and the Government of the Republic of India for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income, the undersigned have agreed that the following shall form an integral part of the Agreement.

Ad Articles 10, 11, 12 and 13

(a) Notwithstanding the provisions of this Agreement, a company resident in a Contracting State in which persons who are not residents of that State hold, directly or indirectly, a participation of more than 50 per cent of the share capital, shall not be entitled to the relieves provided for by the Agreement in respect of dividends, interest, royalties and capital gains arising in the other Contracting State. This provision shall not apply where the said Company is engaged in substantive business operations, other than the mere holding of shares or property, in the Contracting State of which it is a resident.

(b) A company which under the preceding subparagraph would not be entitled to the benefits of the Agreement in respect of the aforementioned items of income, could still be granted such benefits if the competent authorities of the Contracting States agree under Article 25 of the Agreement that the establishment of the company and the conduct of its operations are founded on sound business reasons and thus do not have as its primary purpose the obtaining of such benefits.

IN WITNESS WHEREOF the undersigned, being duly authorised thereto, have signed this Protocol.

DONE in two originals at Zegreb this 12th day of February 2014 in the Croatian, Hindi and English languages, all three texts being equally authentic. n case of divergence between the texts the English text shall prevail.

FOR THE GOVERNMENT OF THE REPUBLIC OF INDIA

FOR THE GOVERNMENT OF THE REPUBLIC OF CROATIA

(Smt. Preneet Kaur)

(Mr. Slavko Linic)

Minister of State for External Affairs

Minister of Finance

Claim deductions when you file returns to get a refund : 16-03-2015

For taxpayers who didn’t submit proof of investments or other deductions in time, March can be vicious. Delayed tax planning and failure to submit receipts of tax-free expenses by employees means their employer would add it all to their salary and accordingly deduct tax.

“Employees are careful about declaring investments such as those under Section 80C or medical insurance premiums and home loan interest. It is the rent receipts, medical or travel bills for claiming LTA that they miss,” says Priya Sundar, Director, PeakAlpha Investment Services.

However, even if you missed the deadline for submitting documents to your employer, you can still claim the deductions for which you are eligible. Form 16 from your employer is only a TDS certificate.

Even if some deduction is missing in the form, you can claim it when you file your income tax return. For instance, if you were unable to produce your rent receipts on time, this deduction won’t figure in your Form 16. You can claim the deduction when you file your tax return. If someone does not receive house rent allowance as part of his compensation package, he can still claim deduction if he is living on rent. Under Section 80GG, up to Rs 2,000 a month can be claimed as deduction for rent paid.

Exemptions such as LTA must be claimed through the employer. LTA can be claimed twice in a fouryear block. If someone missed claiming it this year, he can either carry forward this benefit to next year or claim exemption for fresh travel next year.

But not all of the tax-free income you have missed can be claimed. The tax-free reimbursements offered by your employer cannot be claimed past the deadline. Companies also offer employees up to Rs 15,000 a year in tax-free medical expenses and travel reimbursements that can be claimed against actual bills. If you were unable to submit these bills, the balance will be paid out as taxable income.

However, deductions such as medical insurance premium and Section 80C investments can be claimed when filing tax returns. The criteria being you have the paperwork to support it. “The I-T Department can ask for proof of up to six years from the year of assessment,” says Sudhir Kaushik, CFO and Co-Founder, Taxspanner.

In case you missed any of these tax deductions last year, you can get a refund by filing a revised return. This option can be exercised within two years of filing your original return.

Source : Business Line

Five things you need to know when applying for service tax registration : 16-03-2015

A person who provides a taxable service is required to mandatorily apply for service tax registration if the value of the services provided by him in a particular financial year exceeds a threshold (currently Rs 10 lakh per annum). The service tax rules allows online application for registration and payment of service tax known as ACES. ACES is also an online portal for central excise and service tax.

The first step

First one has to register for ACES by selecting the appropriate link from the ACES portal—www.aces.gov.in. On filling the required details, such as user name and contact, an ACES account is created. A password is sent to the applicant’s email id. This password has to be changed on the first login to the ACES website.

Form ST-1

The applicant now has to fill up Form ST-1 under the REG tab for service tax registration. The application form requires details such as name, address, PAN and details of the service provided by the applicant. Details with respect to commissionerate, division and range can be ascertained and filled up by the applicant by checking the following link: http://www.aces.gov.in/STASE/ui/jsp/common/statelocation.do.

Process

On submission of details, an acknowledgement is generated. This slip alongwith Form ST-1 will have to be submitted at the commissionerate office selected at the time of registration. Supporting documents such as PAN copy can be submitted.

Certificate

A registration certificate is issued after a verification of the applicant’s details by the Range Superintendent. A registration certificate is then sent by email or physical form as per the choice of the applicant.

Points to note

> If value of services provided in a financial year by a service provider is less than the threshold, he has the option to register for service tax, though it is not compulsory.

> An applicant providing more than one service at different locations has to register only once.

Source : PTI

What impact will the service tax hike have on your Budget? : 16-03-2015

The Budget has hiked the service tax rate from 12% plus cess to 14%. We calculated the impact of the hike on an average urban middle-class family spending roughly Rs 1.5 lakh on various services in a year. The figure may seem low but it could go up if the Swachh Bharat cess is also levied on service tax.

The silver lining is that electricity is not defined as a service but as goods. So there is no service tax on the power bill.

Though most services will become costlier, essentials like medical care and education are not liable to service tax.

Financial services account for a major chunk of our service tax bill. These will now cost more.

Only 40% of the food bills is liable to service tax. But given that urban Indians are eating out very often, this could add up to a neat sum.
The real impact of the hike could be higher because it is likely to have a cascading effect on the cost of products and services.

Source : The Economic Times

Notification No.23/2015 dated 14-03-2015

[TO BE PUBLISHED IN THE GAZETTE OF INDIA EXTRAORDINARY,

PART II, SECTION 3, SUB-SECTION (ii)]

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

DEPARTMENT OF REVENUE

[CENTRAL BOARD OF DIRECT TAXES]

Notification No. 23/2015

New Delhi, the 14th day of March, 2015

INCOME-TAX

S.O. 758(E).- In exercise of the powers conferred by sub-sections (9) and(9A) of section 92CC read withsection 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-

1. (1). These rules may be called the Income-tax (Third Amendment) Rules, 2015.

(2). They shall come into force on the date of their publication in the Official Gazette.

2. In the Income-tax Rules, 1962 (hereafter referred to as the principal rules), -

(a) in rule 10 F,-

(i) after clause (b), the following clause shall be inserted, namely :-

“(ba) “applicant” means a person who has made an application;”;

(ii) after clause (h), the following clause shall be inserted, namely :-

“(ha) “rollback year” means any previous year, falling within the period not exceeding four previous years, preceding the first of the previous years referred to in sub-section (4) of section 92CC;”;

(b) in rule10 H, in sub-rule (1),-

(i) for the word “Every” the word “Any” shall be substituted;

(ii) for the word “shall” the word “may” shall be substituted;

(c) in rule 10 I, for the words, figures and letter “who has entered into a prefiling consultation as referred to in rule 10H”, the words, figures and letter “referred to in rule 10 G” shall be substituted;

(e) in rule 10 M, in sub-rule (1), after clause (v), the following clause shall be

inserted, namely:-

“(va) rollback provision referred to in rule 10 MA;”;

(f) after rule 10 M, the following rule shall be inserted, namely:-

“Roll Back of the Agreement.

10 MA. (1) Subject to the provisions of this rule, the agreement may provide for determining the arm’s length price or specify the manner in which arm’s length price shall be determined in relation to the international transaction entered into by the person during the rollback year (hereinafter referred to as “rollback provision”).

(2) The agreement shall contain rollback provision in respect of an international transaction subject to the following, namely:-

(i)the international transaction is same as the international transaction to which the agreement (other than the rollback provision) applies;

(ii) the return of income for the relevant rollback year has been or is furnished by the applicant before the due date specified in Explanation 2 to sub-section (1) of section 139;

(iii) the report in respect of the international transaction had been furnished in accordance with section 92E;

(iv) the applicability of rollback provision, in respect of an international transaction, has been requested by the applicant for all the rollback years in which the said international transaction has been undertaken by the applicant; and

(v) the applicant has made an application seeking rollback in Form 3CEDA in accordance with sub-rule (5);

(3) Notwithstanding anything contained in sub-rule (2), rollback provision shall not be provided in respect of an international transaction for a rollback year, if,-

(i) the determination of arm’s length price of the said international transaction for the said year has been subject matter of an appeal before the Appellate Tribunal and the Appellate Tribunal has passed an order disposing of such appeal at any time before signing of the agreement; or

(ii) the application of rollback provision has the effect of reducing the total income or increasing the loss, as the case may be, of the applicant as declared in the return of income of the said year.

(4) Where the rollback provision specifies the manner in which arm’s length price shall be determined in relation to an international transaction undertaken in any rollback year then such manner shall be the same as the manner which has been agreed to be provided for determination of arm’s length price of the same international transaction to be undertaken in any previous year to which the agreement applies, not being a rollback year.

(5) The applicant may, if he desires to enter into an agreement with rollback provision, furnish along with the application, the request for the same in Form No. 3 CEDA with proof of payment of an additional fee of five lakh rupees:

Provided that in a case where an application has been filed prior to the 1st day of January, 2015, Form No. 3CEDA along with proof of payment of additional fee may be filed at any time on or before the 31st day of March, 2015 or the date of entering into the agreement whichever is earlier: Provided further that in a case where an agreement has been entered into before the 1st day of January, 2015, Form No. 3CEDA along with proof of payment of additional fee may be filed at any time on or before the 31st day of March, 2015 and, notwithstanding anything contained in rule 10 Q, the agreement may be revised to provide for rollback provision in the said

10 RA.(1) The effect to the rollback provisions of an agreement shall be given in accordance with this rule.

(2) The applicant shall furnish modified return of income referred to in section 92CD in respect of a rollback year to which the agreement applies along with the proof of payment of any additional tax arising as a consequence of and computed in accordance with the rollback provision.

(3) The modified return referred to in sub-rule(2) shall be furnished along with the modified return to be furnished in respect of first of the previous years for which the agreement has been requested for in the application.

(4) If any appeal filed by the applicant is pending before the Commissioner (Appeals), Appellate Tribunal or the High Court for a rollback year, on the issue which is the subject matter of the rollback provision for that year, the said appeal to the extent of the subject covered under the agreement shall be withdrawn by the applicant before furnishing the modified return for the said year.

(5) If any appeal filed by the Assessing Officer or the Principal Commissioner or Commissioner is pending before the Appellate Tribunal or the High Court for a rollback year, on the issue which is subject matter of the rollback provision for that year, the said appeal to the extent of the subject covered under the agreement shall be withdrawn by the Assessing Officer or the Principal Commissioner or the Commissioner, as the case may be, within three months of filing of modified return by the applicant.

(6) The applicant, the Assessing Officer or the Principal Commissioner or the Commissioner, shall inform the Dispute Resolution Panel or the Commissioner (Appeals) or the Appellate Tribunal or the High Court, as the case may be, the fact of an agreement containing rollback provision having been entered into along with a copy of the same as soon as it is practicable to do so.

(7) In case effect cannot be given to the rollback provision of an agreement in accordance with this rule, for any rollback year to which it applies, on account of failure on the part of applicant, the agreement shall be cancelled.”;

(i) in Appendix-II of the principal rules,-

(A) in Form No. 3CEC, in item 10, after the words, “Number of years for which APA is proposed to be applied”, the words “including the rollback years” shall be inserted;

(B) in Form No. 3CED, in item 5, after sub-item (e), the following shall be inserted, namely:-

Prior to implementation of cadre restructuring in Nov., 2014, a number of AST validations were executed at the time of migration of a PAN which restricted PAN migration, if any of the validation was pending. In these cases, the AO had to complete the action restricting such migration, to enable PAN migration.

2. It was anticipated that mass PAN migration could take place post-cadre restructuring. Therefore, consequent upon cadre restructuring, AST validations were relaxed or cancelled in non-critical cases for smoothen migration of PAN except refund caging pending cases which was considered as critical and the same was also duly approved by the Competent Authority. Therefore, necessary modifications were made in the System which is now maintaining the details of initiations/workflow reverted while PAN transfer for the validations relaxed / cancelled and it is visible to the destination AO so that new jurisdictional AO is able to take necessary action on the pending cases.

3. The field formations were expected to complete the pending caging work in respect of PANs lying under their jurisdiction before implementation of cadre restructuring so that these could be migrated to their new jurisdiction. However, this office is receiving references from field formations as well as complaints are being lodged at helpdesk wherein it has been reported that ‘consequent upon cadre restructuring, numerous PANs have been transferred to new jurisdiction except those where refund caging is still pending. It is further reported that it is not possible to remove the caging of these PANs due to change of assessing officer who had effected caging of the cases. On analyzing the statistics obtained from the system, it is found that in many cases field formations had not completed refund caging exercise. Further, it is observed that various RCCs across the country have marked the jurisdictions at AO/Range/Charge level as ‘OLD’ and the PANs lying under them are now orphan and therefore caging in these cases cannot be completed.

4. In view of the issues discussed above, the following instructions are issued:

(i) In case of presently active AOs having pending caging of the cases whose jurisdiction has been changed:

The AOs are advised to complete the caging after due verification of the records irrespective of the new jurisdiction after cadre restructuring. After completion of the caging, the PAN can be migrated to its new jurisdiction.

However, in cases where a manual refund was already issued or present active AO do not want to complete the pending caging process. In such scenarios, the AO can block the refund for concerned AY by following the navigation path “ITD →AST→OTHERS→Block Refund”. In this regard, the following instructions are to be followed:

(a) Cases where caging is pending and refund has been issued manually, in such cases, a pop-up message will be displayed onto AO’s “Block Refund” screen and his confirmation will be sought. On getting confirmation, system will mark such refund cases as blocked for concerned A.Y.

(b) Cases where caging is pending and AO verifies non-existance of any manual refunds which is also verified by the system automatically, the active AOs can block these refund cases with their remarks.

With pending caging, in ‘both the above scenarios, once the refund gets into blocked status for that AY., the system allows its PAN migration. The destination AO will not be able to unblock the refund cases which were blocked by adopting the procedure mentioned in 4(i)(a) above. In scenario of 4(i)(b) above, the destination AO can unblock the refund only after due verification and then can complete the caging process.

(ii) In case of presently ‘OLD’marked AOs with pending caging at the AO level:

The jurisdictional CIT(if active) or CIT(CO) can migrate the PAN and in this case, the caging will also migrate to the destination AO as pending and to be completed by the destination AO after due verification of the record.

(iii) In case of presently ‘OLD’ marked AOs with pending caging at the Range level:

This scenario is under analysis and will be taken up separately on the basis of complaints lodged at Help desk.

(iv) In case of presently inactive AOs having pending caging of the cases:

The respective RCCs are to identify such inactive AOs and should be marked “Y” in “OLD Flag” against them. Thereafter, the PANs can be migrated with pending refund caging as discussed in 4(ii) & 4(iii) above.

5. The complete procedure is elaborated in the user manual for the functionality which is available on i-taxnet.

6. This instruction may be brought to the knowledge of all field officers working in your charge for necessary action.

7. For any system related issue, the officers may lodge a complaint at the Helpdesk for speedy resolution.

It is hereby notified for general information that the organization Indian Institute of Technology (BHU), Varanasi (PAN – AAAJI0396R) has been approved by the Central Government for the purpose of clause (ii) of sub-section (1) of section 35 of the Income-tax Act, 1961 (said Act), read with Rules 5C and 5E of the Income-tax Rules, 1962 (said Rules), from Assessment year 2014-2015 and onwards in the category of “University College and other Institution”, engaged in research activities subject to the following conditions, namely:-

(i) The sums paid to the approved organization shall be utilized for scientific research;

(ii) The approved organization shall carry out scientific research through its faculty members or its enrolled students;

(iii) The approved organization shall maintain separate books of accounts in respect of the sums received by it for scientific research, reflect therein the amounts used for carrying out research, get such books audited by an accountant as defined in the explanation to sub-section (2) of section 288 of the said Act and furnish the report of such audit duly signed and verified by such accountant to the Commissioner of Income-tax or the Director of Income-tax having jurisdiction over the case, by the due date of furnishing the return of income under sub-section (1) of section 139 of the said Act;

(iv) The approved organization shall maintain a separate statement of donations received and amounts applied for scientific research and a copy of such statement duly certified by the auditor shall accompany the report of audit referred to above.

2. The Central Government shall withdraw the approval if the approved organization:-

(a) fails to maintain separate books of accounts as referred to in sub-paragraph (iii) of paragraph 1; or

(b) fails to furnish its audit report as referred to in sub-paragraph (iii) of paragraph 1; or

(c) fails to furnish its statement of the donations received and sums applied for scientific research as referred to in sub-paragraph (iv) of paragraph 1; or

(d) ceases to carry on its research activities or its research activities are not found to be genuine; or

(e) ceases to conform to and comply with the provisions of clause (ii) of sub-section (1) of section 35 of the said Act read with rules 5C and 5E of the said Rules.

Whether FDI can be brought if the minimum capitalization was not completed within the period of six months of the commencement of the project?

No new FDI can be brought in the project if the minimum capitalization of US $ 5 million has not been achieved within six months of commencement of the project. If such minimum capitalization was achieved, FDI can be brought in till the period of 10 years or the completion of the project, whichever is earlier.

2.

Whether period of six months from the commencement of project means first approval of the building plan/ layout plan or subsequent approvals also?

Reckoning date would be the commencement of the project which is the date of approval of the building plan/lay out plan by the relevant statutory authority. Further approvals are just addendum/modification to the first approval.

3.

Whether exit is permitted under automatic route after completion of three years without completion of project or trunk infrastructure?

Exit is permitted with FIPB approval on case to case basis even before completion of the project or development of trunk infrastructure.

4.

Is the exit in residential/commercial projects only after completion of project?

The exit is allowed automatically after the completion of project. However, in case of any project if trunk infrastructure, which is clearly defined as development of roads, water supply, street lighting, drainage and sewerage, is developed first, the investor is automatically permitted to exit thereafter.

5.

Whether the past investments made as per the earlier FDI policy on the sector will be adversely impacted?

Press Note 10 of 2014 which provides more liberal FDI regime supersedes the earlier FDI policy on Construction Development sector contained in the FDI Policy Circular of 2014.

6.

Who will certify the completion of trunk infrastructure?

A certificate from an architect registered with Council of Architecture certifying the completion of development of trunk infrastructure would be sufficient to prove that trunk infrastructure development is complete.

7.

Whether exit is permitted on earlier of the completion of project or after development of trunk infrastructure?

Exit is permitted on completion of project or after development of trunk infrastructure, whichever is earlier.

8.

Whether NR to NR transfer is under automatic route?

Transfer of stake from one non-resident to another non-resident before completion of the project or before completion of trunk infrastructure is through the FIPB route.

9.

Definition of Business Centre

Business centre includes where multiplicity of businesses of same or different nature are being carried out from a particular building.

10.

Whether Construction & Development companies with FDI are allowed to dispose unusable/ idle parcels of land?

FDI policy mandates exit on the completion of the project or completion of trunk infrastructure. If the unused land is part of the project and trunk infrastructure has not been developed, then exit can take place with prior approval of FIPB.

11.

Whether minimum capitalization is company specific or project specific?

Minimum capitalization condition is project specific, not company specific.

12.

Whether foreign investor can acquire possession of the completed projects in townships, malls, shopping complexes and business centres?

FDI is permitted in completed projects for operation and management of townships, malls/ shopping complexes and business centres as long as they do not get into the realm of real estate business. Definition of “Real Estate Business” for the purposes of FDI policy is as provided in FEMA Notification No. 1/2000-RB dated May 03, 2000 read with RBI Master Circular i.e. dealing in land and immovable property with a view to earning profit or earning income therefrom and does not include development of townships, construction of residential/ commercial premises, roads or bridges, educational institutions, recreational facilities, city and regional level infrastructure, townships.

S.O. 762 (E).-Whereas, M/s. Vikas Telecom Private Limited (formerly M/s. Vikas Telecom Limited), a private organization in the State of Karnataka, had proposed under Section 3 of the Special Economic Zones Act, 2005 (28 of 2005), (hereinafter referred to as the said Act), to set up a sector specific Special Economic Zone for Information Technology and Information Technology Enabled Services at Outer Ring Road, Devarabeesanhalli Village, Varthur Hobli, Bangalore East Taluk, Bangalore in the State of Karnataka;

And, whereas, the Central Government, in exercise of the powers conferred by sub-section (1) of Section 4 of the said Act read with rule 8 of the Special Economic Zones Rules 2006, had notified an area of 36.85 hectares and 1.31 hectares at Outer Ring Road, Devarabeesanhalli Village, Varthur Hobli, Bangalore East Taluk, Bangalore in the State of Karnataka as Special Economic Zone vide Ministry of Commerce and Industry Notifications Numbers S.O. 1465 (E) and S.O. 781 (E) dated 8th September, 2006 and 28th March, 2008;

And, whereas, M/s. Vikas Telecom Limited, has now proposed to include an area of 0.68 hectares at Outer Ring Road, Devarabeesanhalli Village, Varthur Hobli, Bangalore East Taluk, Bangalore in the State of Karnataka as a part of above Special Economic Zone;

Now, therefore, in exercise of the powers conferred by second proviso to sub-section (1) of Section 4of the Special Economic Zones Act, 2005 and in pursuance of rule 8 of the Special Economic Zones Rules, 2006, the Central Government hereby notifies an additional area of 0.68 hectares at Outer Ring Road, Devarabeesanhalli Village, Varthur Hobli, Bangalore East Taluk, Bangalore in the State of Karnataka, as a part of above Special Economic Zone, thereby making total area of the Special Economic Zone as 38.84 hectares, comprising the survey numbers and the area given below in the table namely:-

India and Mauritius have agreed to push forward their negotiations for a long pending revision of Double Taxation Avoidance Treaty (DTAT), asserting that their objective is to prevent the “abuse” of the convention.

Prime Minister Narendra Modi and his Mauritian counterpart Sir Anerood Jugnauth expressed this resolve during their talks here last night even as India offered USD 500 million concessional line of credit to this keyisland nation for key infrastructure projects.

Negotiations to amend the bilateral tax treaty have been hanging fire for a long time amid India’s apprehensions that it is being misused to route unaccounted money and evade taxes.

The two countries also signed five agreements, including one on developing ocean economy, after talks between Modi and Sir Anerood on the first day of his two-day visit to Mauritius on the second leg of this three-nation tour that will also take him to Sri Lanka tomorrow.

On other key bilateral economic issues, Modi said the two countries should resume their discussions on Comprehensive Economic Partnership Agreement.

In his response, Jugnauth said the Preferential Trade Agreement signed in August 2006 to further enhance market access should be reviewed and that the two countries have agreed on the way forward.

Addressing a joint news conference with Modi, Jugnauth said he had raised with the Indian Prime Minister issues related to the Mauritius-India Double Taxation Avoidance Agreement (DTAA).

“We appreciate that already India postponed the consideration of the GAAR until 2017. However, we have stressed on the initiatives taken by Mauritius to build substance within our offshore jurisdiction. I have requested PM Modi to give his full support on the DTAA as it is of prime importance for our globalbusiness sector,” he said.

Modi in his response said the two sides agreed to continue negotiations for a revised treaty based on shared objectives to prevent the “abuse” of the convention.

Source : The Financial Express

Notification No.14/2015 dated 01-03-2015

Exemption to all goods falling within the First Schedule to the Central Excise Tariff Act, 1985, from the levy of Education Cess – 14/2015 – Dated 1-3-2015 – Central Excise – Tariff